The Kingdom of Saudi Arabia is one of the world's most vibrant and dynamic countries. And as part of its Vision 2030 plan, the Kingdom's government has set ambitious goals to digitize and transform its economy.
At Checkout.com, we have the privilege of being an active participant in accelerating the growth of the Kingdom's digital economy. We're working with both the public and private sector to impart our knowledge powering payments for businesses worldwide.
The work of our Issuer Outreach team is a key pillar of this activity. The team partners with the leading issuing banks across the Kingdom to minimize payments failure and further the growth of the digital economy. We do this because issuing banks are the ultimate arbiters of whether a payment will be approved or declined. If their performance improves, so does that of all the businesses operating in the country's digital economy.
Increasing acceptance rates for a leading Saudi issuing bank
The recent experience of our team working with one of the leading card issuers in Saudi demonstrates what can be achieved. By using rich data-driven insights collected and analyzed via our platform, we identified that this issuer's approval rate was lower than expected. This situation left many customers in Saudi Arabia unable to complete their online transactions, negatively impacting their opinion of online commerce.
We contacted the issuer, proposing a series of actions we could help it implement to improve its acceptance rate. The proposed measures included optimizing and removing legacy fraud rules on specific merchant category codes, whitelisting low-risk BINs and more.
Making these changes had an immediate impact. Within a month, several large merchants we work with saw their approval rates increase by 5% with this issuing bank. That translated to an extra SAR 15m worth of approved payments for this group of merchants.
Proactively engaging with issuers
Proactively engaging with issuers to improve approval rates is rare in the industry. Issuing banks tend to be seen as beyond the hinterland of the payment ecosystem; protectors of money, more than enablers of its movement. This isn't correct. From our experience, issuing banks are willing to collaborate and optimize how payments are processed.
When an issuing bank is falsely declining a payment, everyone loses — the customer, the merchant, and the bank in lost fees and damaged reputation. In the end, the ecommerce sector, and the economy, take the hit. And this is avoidable, as our recent work shows.
Facilitating the growth of the Kingdom's digital economy
The Kingdom has all the ingredients it needs: a young and technological savvy demographic, robust internet infrastructure and high mobile usage; growing adoption of digital payment methods; and affluence. But some areas require improvement to help the country capture its full potential, not least its underdeveloped digital payments infrastructure.
Research finds that digital payments acceptance rates are 15% lower in the Kingdom than in other Middle Eastern markets. Behind this statistic are false declines and frustrated customers who become more likely to shun ecommerce. This contracts the market opportunity and results in lost revenue opportunities for merchants and banks.
As part of our commitment to facilitating the growth of the digital economy in Saudi Arabia, we're expanding our Issuer Outreach program and helping more banks optimize how they process payments. We're also extending the program to other markets in the Middle East and beyond.