Eight out of ten small businesses in the Kingdom of Saudi Arabia (KSA) say they feel optimistic about business recovery in 2021, according to a new study by Visa (NYSE: V), the world leader in digital payments. The majority of KSA merchants (71%) surveyed believe their investment in digital payments will play an important role in their business recovery.
The ‘2021 Small Business Recovery’ study surveyed small and medium businesses (SMBs) in KSA, UAE, Egypt and Pakistan to understand how they have evolved the way they do business to manage the impact of the coronavirus on their bottom line. The study also revealed the key spending trends that merchants believe define the COVID-19 business environment – these include increased use of contactless payments (100% of merchants), takeaways (89%) and home delivery (84%). Merchants in KSA expect these spending trends to continue to grow post-pandemic.
When asked about payment habits during the pandemic, most of the KSA merchants polled (84%) indicated that contactless payments were their customers' preferred payment option compared to 68% of merchants at the beginning of the pandemic. The majority of merchants surveyed (48%) said mobile wallets - such as STC Pay, Mada Pay and Hala Pay - are their customers’ most preferred contactless payment option. The majority surveyed (59%) said they offered contactless payments as an option to respond to the growing demand for the payment option during the pandemic.
More than half (58%) of merchants surveyed said they began offering home delivery and pickup services (60%) and implementing in-store self-help signage (54%) to meet the needs of safety-conscious customers. In addition, 1 in 2 (53%) merchants surveyed ran offers and promotions to attract and retain more customers. Majority of retailers (62%) established digital presence in response to COVID-19 and almost 2 out of 3 (63%) are confident that online shopping will remain a preference well after the crisis.
These findings highlight the shift of more merchants to digital commerce and are consistent with recent figures from the Saudi Ministry of Commerce stating that in the last year, more than 36,000 online stores were established, an increase of 171% over the previous year.
Commenting on the findings of the ‘2021 Small Business Recovery’ study, Ali Bailoun, Visa's General Manager for Saudi Arabia, said: “It's encouraging to see that merchants are optimistic about business recovery in 2021 and the swift adoption of digital payments and recognition of what their customers want - whether it's establishing a digital presence, offering a range of digital payment options, home delivery, or promotions – has been pivotal in them shifting gears from survival mode to recovery. KSA retailers are leading the way in turning insights into action, given how proactive they have been in embracing digitization. At Visa, we continue to work in lockstep with our bank and industry partners to support local merchants’ urgent recovery needs.”
The pandemic experience has highlighted the need to future proof. To prepare for future uncertainties, 10% of KSA merchants surveyed who do not currently have an online presence said they plan to build an eCommerce platform, and about 23% plan to offer contactless payments and digital prepayment options to their customer. The majority of the merchants surveyed (82%) said they believe accepting digital payments is likely to increase their sales. Nearly 8 in 10 (81%) merchants who only accept cash are planning to set up POS terminals within the next two years, and 80% of them plan to invest in new digital payment technologies.
While the majority of merchants recognize the importance of digital acceptance, more than half (53%) of surveyed merchants showed interest in low cost acceptance solutions.
Madhur Mehra, MENA Head of Merchant Sales & Acquiring, Visa, said: “At Visa, our top priority is to help small businesses keep pace and adapt to operate in a world that is rapidly evolving. These findings give us insight into what the barriers are for merchants as they transition to digital and reinforce our strategy to provide practical help for SMBs to access a trusted pool of educational tools and technologies such as low-cost acceptance solutions. As a trusted engine of commerce, Visa intends to continue to roll out new programs and resources that address the pain points of SMBs and help them embrace digitization and thrive in the new normal."