SADAD Payment System - History & Background

History & Background

SAMA mandated that all banks must accept bill payments at their branches from anyone. The payer does not have to be a customer of the bank. Pre-SADAD economics of bill payment placed an unduly large burden on banks; it was inefficient and slow. Banks recovered a small portion of the cost through keeping the collected money for varying periods of 7–30 days after the bill was paid.

Approximately 60-70% of bills were paid in cash at bank branches. Due to the high number of bills generated in the Kingdom, this results in high costs for banks in front office, payment processing, IT integration and reconciliation. In addition, consumers queue for a long time at banks’ front office desks before paying their bills. Bill presentment and collection is largely manual and paper-based creating significant inefficiencies and overheads for billers and banks.

Large billers formed bilateral agreements with banks in order to enhance bill payments collection. This enabled consumers to use their bank channels to view and pay bills (without any bill consolidation). It required every biller to connect to the 12 different banks operating in KSA and from banks to connect separately to every biller they are under contract with.

SAMA chose to integrate these connections through SADAD, which is a single platform that links different billers and banks to enable the consumers to use the electronic channels of any bank. SADAD is now facilitating the payment of high-volume periodic bills (such as utility bills and phone bills) and customer initiated payments, such as traffic fines.