Sadad: Is It the Solution?

Saudi Arabia has one of the fastest growing economies in the world. As a result, the Saudi Arabian Monetary Agency (SAMA) faced the challenge of dealing with the rapidly growing bill payment need. The first solution SAMA came up with was to hand banks the responsibility of the government bills and other fundamental sectors bill payments from consumers. A lot of inconvenience resulted from this method. Banks, billers, and consumers suffered from the long, costly process of bill payment through bank branches. Then SAMA came up with SADAD Payment System as an alternative to bank branches payment systems. SADAD is the first national EBPP, Electronic Bill Presentment and Payment, in Saudi Arabia. After SADAD was launched, billing payment in Saudi Arabia took another direction. Bill payments nowadays are more convenient, easier, and efficient.

In the 1980s, banks where forced by SAMA to accept payments from costumers on behalf of billers in Saudi Arabia. Banks were ordered to accept bill payments from individuals even if they were not the bank’s clients, with no additional charges. This was a financial load on banks. As the economy rapidly grow, the amount of bills issued and paid through bank branched grew as well In 2003, about 60‐70% of invoices are paid at bank branches and a major quantity of receipts are paid by individuals who are not the bank’s clients. As a result, the process was inefficient, and faced a lot of complaints from banks, billers and also ends consumers.

Banks and billers suffered when it came to costs and convenience. Presenting and collecting bills was mainly manual and paper-based, which resulted in time loss and higher paper costs. Bill-payment process was costly as well. Due to the high amount of bills issued in Saudi Arabia, expenses where high on banks. Banks needed to expand and provide more front desk support which will result in a higher overhead costs. IT addition and settlement payments were another burden on banks and billers too....