SADAD Overview NAM-080224 - United...
Transcript of SADAD Overview NAM-080224 - United...
Introduction:
This document was prepared to be included with the supporting documents for Saudi Arabian Monetary Agency (SAMA) application for the United Nations Public Service A d it th f ll iAwards, it covers the following:
History and Background of Bill Payment in Saudi Arabia
SADAD Payment System Overview and Products Offering
SADAD Current State in regard to coverage and number of transactionsSADAD Current State in regard to coverage and number of transactions
SADAD OverviewSaudi Arabian Monetary Agency (SAMA) ApplicationSaudi Arabian Monetary Agency (SAMA) Application for the United Nations Public Service Awards
February, 2008
In the 1980s, SAMA mandated banks to accept payments on behalf of billers at no additional cost to customers or billers, and in return Banks recover a small portion of these costs through float incomeportion of these costs through float income
Key Issues
When this mandate was issued electricity and telecom l l h hi
Pre SADAD Bill Payment Network
revenue were largely a government revenue, however this situation has changedIn 2003, approximately 60‐70% of bills are paid at bank branches and a significant proportion of bills are paid by people who are not the bank’s customersBanks pay for the IT integration costs with billersElectricity Bank A
Consumer
p y gBanks incur costs for reconciliation and cash handling related to bill paymentsBanks recover a small portion of these costs through float income, keeping the collected money for 7‐30 days Banks are under further pressure to build additional capabilities for supporting billers
Electricity
Telecom
Bank A
Bank B
capabilities for supporting billersWhen the relationship started between the major billers it was completely manualBanks started to link electronically with billers to reduce the cost of processing the large number of bills manually, and open new electronic payment channels like ATMs and Phone
Water Bank C
Government Bank D
banking to reduce the use of its branches
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However, The privatization of Saudi Telecom Company, the introduction of mobile telecom services and liberation of the telecom market led to a large increase in the number of bills in Saudi Arabiaincrease in the number of bills in Saudi Arabia…
Number of Electricity and Telecom Subscribers in Saudi Arabia
CAGR 13.6%
Comments
The privatization of STC and the
Number of Electricity and Telecom Subscribers in Saudi Arabia(in thousands)
The privatization of STC and the introduction of the second mobile service provider (Mobily) are the main factors of the high growth rate
Mobile subscribers constitute the largest portion of the billing market share with 61% of the total number of subscripted
Mobile lines subscribers also has the largest Cumulative Annual Growth Rate (CAGR) of 67%Growth Rate (CAGR) of 67%
Government services also grew largely because of the growth of traffic, passports and labour related payments (about 30 million transactions a year)
Fixed Lines Mobile LinesElectricity
4,172 4,318 4,507 4,661 5,023 5,360 6,051 6,915 7,963 9,554 12,355 14,987 17,362 21,847
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Source: Ministry of Water and Electricity, and International Telecommunication Union
The payment market in Saudi Arabia is huge with more than 280 million payments occurring every year and the number is growing fast…
Saudi Market Segments
Market
Telecom
Market Size(1)
155.4
Major Players
STC & Mobily
Utiliti 60 1 SEC W t &M fi
SADAD Share
37%
100%
Growth
16.2%
5 6%Utilities 60.1 SEC, Water, & Marafiq
Government 37.2 Passports, Traffic, and Labour
100%
1%
5.6%
6.0%
Airlines 9.4 Saudi and Emirates Airlines 0% 5.0%
I 6 8 CCI 9% 4 %Insurance 6.8 NCCI 9% 47.7%
Real‐estate 6.7 N/A 0% N/A
Instalments 3.6 ALJ, NCB, and Jumaih 0% 3.9%
M di 2 2 Al jd O bi Sh i d A 0% 0%Media 2,2 Almajd, Orbit, Showtime, and ART
Wholesale 2,5 Pepsi, Cock & Dairy Producers
0%
0%
5.0%
4.1%
Education 0.7 Private schools and colleges
M f i / di & bi
5%
%
N/A
/Manufacturing N/A Saudi Aramco & Sabic 0% N/A
Total Market 284.6
SADAD Overview 6
(1) Million Transactions per Annum
SADAD in market No market share
SAMA mandate led consumers to use bank branches as their primary payment channels (by bank customers and non‐customers), followed by the billers’ collection centers and ATMscollection centers and ATMs…
Bill Payment Channels Top Consumer IssuesBill Payment Channels Top Consumer Issues Concerning Bill Payment
Time consuming
Delays/Loss in postage
Disconnection of service due to
100
67
72
Overlooking payment dates
delays in bill processing
Inconvenient 63
63
67
Having to keep track of multiple bills
Handling large cash amounts 55
52
Number of mentions, “Time Consuming” =100
0 20 40 60 80 100
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Source: SADAD Market Research 2002
It was clear that there was a need for a centralize system that acts as an interface between billers and banks, so billers can use the banking channels with low cost…
SADAD Model
SADAD EBPP ModelSADAD Model Key Attributes
SADAD will serve as a visible trusted brand for facilitating electronic payments – predominantly high volume and low value
Consumer
SADAD was built on an Electronic Bill Presentment and Payment (EBPP) Model, that acts as a single point of linkage into SADAD for Billers and Banks based on open standards
A “thin consolidation” model will be used
SADAD will be an intermediary in the information flow only – it will not hold funds on behalf of billers
SADAD
Biller A
Biller B
Bank A
Bank B
hold funds on behalf of billers
This model will allow more billers to enjoy the wide reach of banking channels in Saudi Arabia
All banking channels will be used to collect billers money from customers, and these channels include (ATM, Phone Banking, Online Banking, Bank Branches, and Point of Sale Terminals)
Biller N Bank N
SADAD will not own customers directly – banks and billers will continue to own and manage customer relationships
Customers don’t have to register with SADAD in order to use its services, where all banked customers are pre‐registered, and non bank customers can use SADAD through bank branches and cash acceptance machinesmachines
A wide range of payment types will be supported via SADAD (e.g. Post‐paid and Pre‐Paid)
Streamlined processes for information exchange and payment settlement
SADAD Overview 8
SADAD currently offer three major product through all banking channels (ATM, Phone Banking, Internet Banking and Branches)…
SADAD Products
Post‐Paid Pre‐paid E‐Vouchers
Description Customer enter account or bill
number and SADAD present the
Customer enter account number
and recharge amount
f ll b
Customer don’t enter account
number and choose from a list of
hamount
SADAD notify Biller about
payment and account is settled
immediately
SADAD notify Biller about
payment and account is recharged
immediately
recharge categories
Terminal prints the voucher and
customer use just like a scratch
card
SADAD Channels
Automated Teller Machine
Phone Banking Internet Banking Banks Branches
Customers
SADAD Overview 10
SADAD will offer billers a wide range of payment channels through thousands of physical and electronic collection channels and outlets ‐ through the Saudi Banks(1)‐ that reach every potential customer in Saudi ArabiaBanks( )‐ that reach every potential customer in Saudi Arabia…
Geographical Reach Number of Channels Per Bank
Banks Branch ATM POS (1)
ANB
SAMBA
123
65
579
411
7,006
4,455
Province Branch
Central Province
Western Province
436
351
ATM
2,147
1,757 SAMBA
NCB
Riyad
SFB
65
266
200
74
411
1,097
1,336
226
4,455
9,430
6,156
4 775
Western Province
Eastern Province
Northern Province
S h P i
351
230
134
157
1,757
1,171
651
781 SFB
Al Rajhi
74
403
226
1,715
4,775
12,207
SIB 25 209 169
Southern Province
Total
157
1,351
781
7,331
Customer ReachSHB
BAJ
Al Bilad
42
23
60
169
127
300
4,824
0
0
Branches and ATMs are located in about 200 different cities and towns around the country
Electronic Channels (reaches every household in Saudi Arabia)
Online bankingEmirates
SABB
1
63
1
336
0
5,784
NBK 1 1 0
Online banking
Phone Banking
11,010,398 active bank cards that can use SADAD
Registration is not required to use SADAD
SADAD Overview 11
Total 1,351 7,331 54,806(1) POS are not yet linked to SADAD
SADAD Post‐Paid Option offers the Biller the option of uploading exact amounts to be viewed and paid by customers…
Bills Upload Payment Initialisation Acknowledgement Of Transaction
BillerCredit
Account &Approve
Transaction
Upload Bills
Information
Receive Payment
Notification
10 11
End
UpdateSADADDatabase
Receive &ValidatePaymentDATA
SendResponse
SendReal‐timePayment
Notification
3 4 9
SADAD
Post‐PaidPaymentBusinessRules
Receive Payment Advise
& Update SADAD DB
8
Bank
CollectAmount& ConfirmPayment
Send PaymentAdvise
Present
ValidReceiveResponse
C t U2
5
6a
6b 7
No
Yes
Customer
ValidationError toCustomer
Capture UserInput & Send to SADAD
Initiate Payment1
End
SADAD Overview 12
SADAD Prepaid Option Billers the option of uploading customer accounts numbers with its business rules…
Act. Upload Payment Initialisation Acknowledgement Of Transaction
BillerCredit
Account &Approve
Transaction
Upload account numbers
Receive Payment
Notification
10 11
End
UpdateSADADDatabase
Receive &ValidatePaymentDATA
SendResponse
SendReal‐timePayment
Notification
3 4 9
SADAD
Pre‐paidPaymentBusinessRules
Receive Payment Advise
& Update SADAD DB
8
Bank
CollectAmount& ConfirmPayment
Send PaymentAdvise
Present
ValidReceiveResponse
C t U2
5
6a
6b 7
No
Yes
Customer
ValidationError toCustomer
Capture UserInput & Send to SADAD
Initiate Payment1
End
SADAD Overview 13
E‐Vouchers provide billers the option of uploading electronic vouchers with set amounts for their customers to purchase from all the available channels to be used at the biller siteused at the biller site…
Biller
Vouchers Upload Payment Initialisation
Upload Vouchers
SADAD
UpdateSADADD t b
Receive &ValidatePayment
SendVoucher
Information
3 4
SADAD Database DATAInformation
Bank Provide Voucher Info to Customer
CollectAmount andSend Payment
Advice
2 5
End
Customer Initiate Payment
1
SADAD Overview 14
SADAD also provide its billers other services and support in addition to its major products…
SADAD Services
Service Description
Real‐time and Batch Payment Notification Real‐time and Batch bill payment notification to Billers
Daily Reconciliation Provide to Billers daily reconciliation reports showing a breakdown of all transactions processed by SADAD
One Business Day Settlement
Settle and collect the money from all the Banks and transfer it to the Biller’s Bank account in one business dayin one business day
Reports Provide periodical reports to billers about all the Biller related activities through SADAD
24/7 Help Desk Provide 24/7 help desk dedicated for serving Billers and Banks only/ p Provide 24/7 help desk dedicated for serving Billers and Banks only
SADAD Portal Provide access to SADAD Portal which have real‐time data about all the transactions, and provide a mean to communicate between the Biller and SADAD
Onboarding Support Provide support for integration activities with SADAD system through a dedicated Onboarding Support pp g y gOnboarding team
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With every month passes SADAD expanded its network by adding more banks and billers, by January 2008 SADAD linked 28 billers and 12 banks, and expected to reach 50 billers and 15 banks by end of 2008to reach 50 billers and 15 banks by end of 2008
SADAD Network Growth – Billers and Banks (12 months)
45
30
35
40
15 16 17 19 19 2122
2528
15
20
25
6 6 611 11 11 11 11 11 12 12 12
5 5 6
0
5
10
BillersBanks
Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08
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As of Today, SADAD is linked to 12 banks with most of their channels operational and working with the remaining banks to do so…
Banks and its Channels
Banks Branch ATM Phone Banking Online Banking CAM
ANB
SAMBA
N/A
NCB
Riyad
SFB N/ASFB
Al Rajhi
N/A
BAJ
SHB
N/A
N/ASHB
Emirates
SABB
N/A
N/A
Testing Phase Not Available
SIB
Al Bilad
N/A
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g
SADAD also linked 28 billers so far, and working with 40+ more (government and private) in different integration stages…
Government Agencies
Water Services
Riyadh Municipality
DZIT
S di
Home PC Initiative
Medina Municipality
Jeddah Municipality
i i li
King Abdulaziz University
Makkah Municipality
CITC
i i liSaudi Post
Labor Ministry
MOCI
Traffic Police
Eastern Provence Municipality
Tabouk Municipality
Hail Municipality
Jouf Municipality
Jazan Municipality
Najran Municipality
Aseer Municipality
Baha Municipality
Private Sector
Passports
Customs
Qassim Municipality
MOFA
Qiyas
Northern Borders Municipality
Saudi Telecom Company
Marafiq
Samba
B T l
Mobily
National Commercial Bank
American Express
Al I t ll t C
NCCI
Sama Airlines
Saudi Electricity Company
SABB B kBravo Telecom
Saudi Hollandi Bank
Jeddah Chamber
NasAir
Alyusr Installment Company
Mubasher Stock Market Info
Awan Stock Market Info
Sahara Net
SABB Bank
ShowTime
Nesma Internet
Awal Net
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OperationalPreparation Phase
The majority of bills paid in Saudi Arabia are paid through SADAD, which prove SADAD’s value to consumers who opt to use it as their main payment method instead of the old way of doing businessinstead of the old way of doing business…
SADAD Market Share Trends ‐ Bill Volume (12 months)
7 75
73
71%
69%
65%
57%
49%
36%
28%
21%
18%
5
64%
72%
79%
82%
79%
5% % % %
21%
25%
27%
29%
31%
35%
43%
51%
%
Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08
Other ChannelsSADAD
SADAD Overview 20
Other Channels: Billers owned channels, which include collection centers, distributors, credit cards, checks, cash, etc.
SADAD has managed to shift consumers’ behavior by moving them from physical channels (branches) to electronic channels (ATM, Phone Banking, and Online Banking) branches usage went down from 73% to 12%Banking), branches usage went down from 73% to 12%.
SADAD Channels Usage Trends From Beginning to Day
7%1%
19%
27%
19%
Website 27% ebs te
Phone
ATM
Branch73%
42%
Branch
12%
2003 2008
SADAD Overview 21
Currently more consumers are using the internet to query their bills, however most payments are made using Automated Tellers Machines…
SADAD Channel Usage Trends (Jan 2008)
ll
16% 15%
Bill Query Bill Payment
6%
50%47%
26%
ATM
Branch
Phone
Website
28%
12%
SADAD Overview 22
Bill Query: is the process of consumers querying their bills statusBill Payment: is the process of when consumers actually pay their bills
The number of bills paid in SADAD grew steadily in the last 12 months to reach a record 5.3 million bills paid in January 2008 alone, and the number is expected to reach about 8 million monthly payments by end of 2008reach about 8 million monthly payments by end of 2008
SADAD Monthly Payments Transactions ‐ Volume (12 months) (in ,000 payments)
3 506
5,319
1,5861,963
2,377
3,171 3,506
659 870 935 1,037 1,018
1,256 1,586
Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08
SADAD Overview 23
The value of bills paid in SADAD also grew steadily in the last 12 months to reach a record SAR 2.3 billion paid in January 2008 alone, and the number is expected to reach about SAR 3 5 billion monthly by end of 2008to reach about SAR 3.5 billion monthly by end of 2008
SADAD Monthly Payments Transactions ‐ Value (12 months) (in SAR ,000,000)
2,324
1,602 1,609
,
580
823 1,023
1,200
261 382 382 436 426
580
Feb-07 Mar-07 Apr-07 May-07 Jun-07 Jul-07 Aug-07 Sep-07 Oct-07 Nov-07 Dec-07 Jan-08
SADAD Overview 24