Good Practices and Innovations in Public Governance 2003-2011

2008 Category 2: Saudi Arabia
Western Asia
Saudi Arabia
2008 Category 2 Winner
SADAD Payment System
Saudi Arabian Monetary Agency, Riyadh, Saudi Arabia
Description
Promoting greater efficiency and transparency; minimizing fraud and increasing
women’s access to employment through a single shared national platform payment
system for bills through banks 24/7, and other means.
Summary
The “SADAD Payment System” is a single shared national platform payment system for
bills through banks 24 hours a day and seven days a week (24/7), which has promoted
greater efficiency, and transparency as all transactions are electronically completed.
It has also minimized fraud thanks to audit trail and data reporting for each
transaction; it has reduced costs by eliminating government subsidies; and last, but
not least, it has boosted the role of women in the job market by employing women to
run and operate SADAD as they constitute more than 60% of its workforce and
100% of SADAD’s operational team.
The Challenge
In the early 1980s, the Saudi Arabian Monetary Agency (SAMA) – The Central
Bank of Saudi Arabia – mandated that all Saudi banks accept utilities’ bill payments
on behalf of utility companies (electricity, telecom and water) at no charge to customers
and without distinction as to whether the payer was a customer of the bank
where the bill was being paid or not. The SAMA mandate placed an unduly large
burden on banks, resulting in high costs; thereby leading banks to resist providing
collection services.
Moreover, since a bank account was required to make payments of various utilities,
including cellular phones, SAMA’s strategy was hard to enforce. With the increased
use of cell phones and the requirement of a bank account to pay bills, a black market
rapidly developed where those with an account would buy phone cards at bank counters
and resell them to make a profit.
According to a survey conducted by SAMA, the top consumers’ complaints concerning
bill payment were that the process was very time consuming, with postage delays
and loss of bills, which resulted in disconnection of service due to delays in bill processing.
It was also inconvenient because of the handling of large cash amounts.
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