The Kingdom of Saudi Arabia is one of the world's most vibrant and dynamic countries. As part of the 'Vision 2030' plan, its government has set ambitious goals to digitize and transform its economy.
At Checkout.com, we've had the privilege of being an active participant in accelerating the growth of the Kingdom's digital economy. We've worked 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 is dedicated to partnering 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. And, as we've seen in other markets, 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 the Issuer Outreach team working with one of the leading card issuers in Saudi demonstrates what can be achieved. We identified this leading issuing bank as having a lower than expected approval rate which was causing the bank to receive an increase in merchant complaints as customers were unable to complete their transactions.
We reached out to the issuer, proposing a series of steps that we could help it implement to improve its approval rate. The proposed measures included optimizing and removing legacy fraud rules on specific merchant category codes, whitelisting low-risk BINs and more.
These measures had an immediate impact. The merchants we process for in KSA saw their approval rates increase by 5% within a month with this issuing bank. This translates to an extra SAR 15m worth of approved payments.
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 their customers' money more than enablers of its movement. This view needs to change. 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 then the macroeconomy, takes the hit.
And this is avoidable, as our recent issuer outreach program shows. By using rich data-driven insights collected and analyzed via our platform, we are helping issuers take the necessary actions to stop false declines at source, and other optimizations that more broadly improve approval rates.
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 it also has shortcomings that stand in the way, not least its underdeveloped digital payments infrastructure.
Research finds that digital payments acceptance rates are 15% lower in the Kingdom than in other markets. Behind this statistic are false declines and frustrated customers who become more likely to shun ecommerce, contracting the market opportunity for retailers. This squeeze will disincentive new entrants and make it harder for incumbents to justify innovation and marketing budgets.
Checkout.com will be scaling up our issuer outreach program as we support KSA to catalyze its ecommerce sector and reach its 2030 transformational goals. We'll also be rolling out our issuer outreach program across the Middle East and Pakistan.