Saudi Arabia has already gone mostly cashless and my next guest says the real work is only just beginning. Joining me is Dalal Al Rayes, Co-Founder and CEO of Spare. Welcome to Wall Street to Mena. What brought Spare to Money 20/20 Middle East in Riyadh?
Thank you. Money 20/20 — this is our third year participating. For us it is a very special conference because given that we are a fintech company operating in this space, it brings in all the ecosystem providers and players. Very relevant and important for us to take part.
What does Spare actually do?
Spare is an open banking infrastructure provider. We integrate with banks to provide data and facilitate payments. Our clients are businesses who are looking to get bank information — either from their customers' bank accounts, whether individuals or businesses — or to have account-to-account payments. We sit in the middle between businesses and banks.
The Governor of SAMA said that electronic payments now make up 85% of all retail transactions. Have we solved digital payments or is there still more to build?
Definitely. 85% is a very impressive number — actually beyond the goals Saudi had set a couple of years ago. However, a large part of what has been solved is on the consumer side. What is going to happen with open banking payments — specifically account-to-account payments — will really change how businesses can receive payments. Account-to-account payments do not depend on card schemes or existing rails. They are payments directly from a bank account. They help merchants in three main ways. First, economics — since there are no rails to process the payment between merchant and customer, there are huge cost savings. Today 70 to 80% of merchant fees are for card processing. When you eliminate those, a lot of those savings go to the merchants. Second, cash flow — since it is a direct payment into the account, merchants receive money faster, which helps with working capital. Third, risk — a card payment involves putting in your card numbers and charging. With an account-to-account payment, a customer authenticates directly in their bank. That reduces the risk of chargebacks and fees related to risky payments.
How do you get merchants handling high-value tickets to actually adopt these newer forms of payments?
Merchants are always looking for something better for them and better for consumers. Two things help us reach merchants. First, we work with the central bank — we are regulated and follow frameworks developed by central banks, which gives assurance to merchants. Second, merchants are always looking for benefits to improve their margins and share those with customers. Today a customer does not want to pay fees on payments, and merchants do not want to pay 20% of their top line on fees. Account-to-account payments being cheaper is something they will always want to adopt.
How easy is it for a business to set up these payment rails today?
Once they become available and switched on in Saudi by the central bank and the banks, businesses will be able to integrate very simply through an API connection — something a business can set up within a few days if they have a technical team. Through one API connection they will be able to make payments across all the banks. The integration process, setup, and onboarding is significantly faster than other payment methods.
Thank you so much for being with us today.
Of course. Thank you.
