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Digital Payments Revolution Boosts E-Commerce Opportunities in Saudi Arabia

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Digital Payments Revolution Boosts E-Commerce Opportunities in Saudi Arabia

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For an extended period, the Saudi Arabian economy predominantly relied on cash, stemming from a culture rich in traditional local markets and negotiations.
This preference, once reinforced by a lack of trust in banking systems and the absence of regulatory frameworks for online transactions, is rapidly evolving.
With two-thirds of the kingdom’s population being under the age of 35, and the country ranking third globally in smartphone usage, Saudi Arabia is undergoing a swift transformation in payment preferences.
This shift not only reshapes consumer behavior but also serves as a pivotal element in the broader narrative of digital transformation, paving the way for a more efficient system for e-commerce and logistical services.
In a society where cultural traditions once dictated a preference for cash transactions, the Kingdom now embraces the digital revolution.
This transformation is evident in how both consumers and merchants swiftly adapt to online financial activities.
Prior to the coronavirus pandemic, cash-on-delivery was the preferred method for e-commerce transactions. However, today, digital payments have seen a significant surge in adoption, propelled by a large number of tech-savvy youth and the impact of the pandemic.
Digital Payments
In 2020, digital payment transactions in the Kingdom surged by 75%, while cash withdrawals from ATMs experienced a significant decline.
The reality is that this shift towards digital payments is not merely a matter of convenience or a response to global trends. It is a strategic move aligned with the Kingdom’s national transformation plan, “Vision 2030,” aiming to accelerate the digital economy and increase cashless transactions.
Government initiatives, such as the introduction of the SADAD system, and the efforts of the Saudi Central Bank to regulate and unify the digital payment sector, have streamlined electronic payments and enhanced trust among users.
This regulatory framework has played a crucial role in encouraging the adoption of online payment services, making digital transactions more secure and reliable.
Payment Applications
The e-commerce sector in Saudi Arabia, expected to surpass $13.2 billion by 2025, directly benefits from the growing trend towards digital payments.
With consumers becoming more comfortable with online payments, there has been a surge in demand for e-commerce, exemplified by a 60% increase in online shopping from 2019 to 2020.
The emergence of mobile payment applications such as Apple Pay, Google Pay, and various local apps has facilitated this shift, making smartphone payments more convenient than ever.
This increasing convenience in digital transactions not only enhances consumer comfort but also drives the expansion of the e-commerce sector. It also brings about an innovative approach in the logistics services domain to keep pace with this growth.
The rapid evolution of payment methods within the Kingdom represents a transformation reshaping the landscape of e-commerce and the logistics sector, particularly in the realm of order delivery.
Reducing cash transactions simplifies the delivery process, minimizes errors, enhances efficiency, and simultaneously supports environmental sustainability goals by reducing paper usage and improving delivery routes, resulting in decreased fuel consumption and carbon footprint.
One of the prominent challenges traditionally faced by Saudi Arabia in delivery services has been the absence of a clear and unified system for delivery addresses.
The lack of postal codes and precise addresses often leads to reliance on phone calls and detailed descriptions from customers, adding complexity and potentially causing delays in delivery operations.

To overcome these challenges in order delivery, leading logistics companies in Saudi Arabia are increasingly turning to the adoption of innovative technologies.
The Internet of Things
Nowadays, global positioning systems and Internet of Things (IoT) systems, along with advanced transportation management systems, are being utilized to achieve an immediate and smarter vision in order delivery.
These technologies not only enhance route planning and delivery efficiency but also ensure the fulfillment of the increasing demand for e-commerce through equally sophisticated logistical solutions.
The integration of these technologies serves as a testament to the industry’s commitment to overcoming fundamental challenges in delivery, especially within the rapidly evolving digital landscape.
Looking to the future, the potential use of drones and self-driving vehicles is also a fantastic means to enhance delivery services.
These advanced solutions could revolutionize the efficiency and speed of delivery operations, especially in hard-to-reach areas or during peak hours.
Meanwhile, Saudi Post has embarked on an ambitious initiative to provide an address for every workplace or residence.
Individuals or companies registering their addresses receive a short code consisting of 8 characters (4 letters and 4 numbers), creating a unified and comprehensive address system for all regions, cities, and villages in Saudi Arabia.
The current challenge lies in encouraging e-commerce retailers to include the new addresses in their customers’ orders for faster and more standardized adoption.
Despite the challenges, companies in the Kingdom are expanding their local networks and exploring on-demand delivery tools, allowing customers to specify delivery times and locations.
However, maintaining a balance between service quality and cost management remains a continuous and fundamental challenge in this sector.
Innovative Solutions
Saudis are anticipating a future where synergy between online payment methods, e-commerce, and logistics services in the Kingdom becomes more integrated and advanced.
The widespread adoption of digital payment methods is expected to drive an increase in e-commerce activities.
This evolution extends beyond enhancing current systems; it creates both opportunities and new challenges in the logistics landscape.
In conclusion, the shift towards digital payment methods serves as a catalyst for a broader transformation in the sectors of e-commerce and logistics in Saudi Arabia.
The future will witness a rise in seamless digital transactions and efficient logistical solutions, fostering the growth of the e-commerce sector and contributing to the broader economic objectives of the kingdom.
As Saudi Arabia continues to embrace digital transformation, the future of e-commerce and logistics appears not only promising but also integral to economic growth and diversification in the country.

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What Do ‘Expert Level’ Talks Signal for the Progress of the Iran-US Nuclear Negotiations? 

US Secretary of Energy Ernest Moniz and Head of the Iranian Atomic Energy Organization Ali Akbar Salehi, left, meet at a hotel in Vienna, July 9, 2015. (Carlos Barria/Pool Photo via AP, File)
US Secretary of Energy Ernest Moniz and Head of the Iranian Atomic Energy Organization Ali Akbar Salehi, left, meet at a hotel in Vienna, July 9, 2015. (Carlos Barria/Pool Photo via AP, File)
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What Do ‘Expert Level’ Talks Signal for the Progress of the Iran-US Nuclear Negotiations? 

US Secretary of Energy Ernest Moniz and Head of the Iranian Atomic Energy Organization Ali Akbar Salehi, left, meet at a hotel in Vienna, July 9, 2015. (Carlos Barria/Pool Photo via AP, File)
US Secretary of Energy Ernest Moniz and Head of the Iranian Atomic Energy Organization Ali Akbar Salehi, left, meet at a hotel in Vienna, July 9, 2015. (Carlos Barria/Pool Photo via AP, File)

Negotiations between Iran and the United States over Tehran's rapidly advancing nuclear program will move Wednesday to what's known as the “expert level” — a sign analysts say shows that the talks are moving forward rapidly.

However, experts not involved in the talks who spoke with The Associated Press warn that this doesn't necessarily signal a deal is imminent. Instead, it means that the talks between Iranian Foreign Minister Abbas Araghchi and US Mideast envoy Steve Witkoff haven't broken down at what likely is the top-level trade — Tehran limiting its atomic program in exchange for the lifting of economic sanctions.

“Agreeing to technical talks suggests both sides are expressing pragmatic, realistic objectives for the negotiations and want to explore the details,” said Kelsey Davenport, the director for nonproliferation policy at the Arms Control Association who long has studied Iran's nuclear program.

“If Witkoff was making maximalist demands during his talks with Araghchi, such as dismantlement of the enrichment program, Iran would have no incentive to meet at the technical level.”

That technical level, however, remains filled with possible landmines. Just how much enrichment by Iran would be comfortable for the United States? What about Tehran's ballistic missile program, which US President Donald Trump first cited in pulling America unilaterally out of the accord in 2018? Which sanctions could be lifted and which would be remain in place on Tehran?

“The most important determinant of expert talks’ value lies in whether there is a political commitment to do something and experts just need to figure out what,” said Richard Nephew, an adjunct fellow at the Washington Institute for Near East Policy who worked on Iran sanctions while at the US State Department during negotiations over what became the 2015 nuclear deal.

“If the experts also have to discuss big concepts, without political agreement, it can just result in spun wheels.”

Experts and the 2015 nuclear deal

The 2015 nuclear deal saw senior experts involved in both sides of the deal. For the US under President Barack Obama, Energy Secretary Ernest Moniz reached an understanding working with Ali Akbar Salehi, then the leader of the Atomic Energy Organization of Iran. Both men's technical background proved key to nailing down the specifics of the deal.

Under the 2015 agreement, Iran agreed to enrich uranium only to 3.67% purity and keep a stockpile of only 300 kilograms (661 pounds). Today, Iran enriches some uranium up to 60% purity — a short, technical step away from weapons-grade levels of 90%. The last report by the International Atomic Energy Agency put Iran's overall uranium stockpile in February at 8,294.4 kilograms (18,286 pounds).

The deal also limited the types of centrifuges Iran could spin, further slowing Tehran's ability to rush for a bomb, if it chose to do so. It also set out the provisions of how and when sanctions would be lifted, as well as time limits for the accord itself.

Reaching limits, relief and timelines require the knowledge of experts, analysts say.

“A nonproliferation agreement is meaningless if it cannot be effectively implemented and verified,” Davenport said. “The United States needs a strong technical team to negotiate the detailed restrictions and intrusive monitoring that will be necessary to ensure any move by Iran toward nuclear weapons is quickly detected and there is sufficient time to respond.”

It remains unclear who the two sides will be sending for those negotiations.

Hiccups already heard in these negotiations

Both the Americans and the Iranians have been tightlipped over exactly what's been discussed so far, though both sides have expressed optimism about the pace. However, there has been one noticeable dispute stemming from comments Witkoff made in a television interview, suggesting Tehran could be able to enrich up to 3.67% purity. However, analysts noted that was the level set by the 2015 deal under Obama.

Witkoff hours later issued a statement suggesting that comparison struck a nerve: “A deal with Iran will only be completed if it is a Trump deal.”

“Iran must stop and eliminate its nuclear enrichment and weaponization program,” Witkoff added.

Araghchi responded by warning that Iran must be able to enrich.

"The core issue of enrichment itself is not negotiable,” he said.

Despite that, experts who spoke to the AP said they remained positive about the talks' trajectory so far.

“Although still early stages, I’m encouraged so far,” said Alan Eyre, a former US diplomat once involved in past nuclear negotiations with Tehran. “The pace of negotiations — to include starting expert level meetings this Wednesday — is good.”

He added that so far, there didn't appear to be any “mutually exclusive red lines” for the talks as well — signaling there likely wasn't immediately any roadblocks to reaching a deal.

Nephew similarly described reaching the expert level as a “positive sign.” However, he cautioned that the hard work potentially was just beginning for the negotiations.

“They imply the need to get into real details, to discuss concepts that senior (officials) might not understand and to answer questions. I also think too much can be read into them starting,” Nephew said. “Expert talks can sometimes be a fudge for seniors to avoid working on tough issues — ‘let’s have experts discuss it while we move on to other things’ — or to sidestep big political decisions."

Corey Hinderstein, the vice president for studies at the Carnegie Endowment for International Peace and a former US government nuclear expert, described herself as feeling “cautious optimism” over the expert talks beginning.

“Heads of delegation are responsible for setting strategic goals and defining success,” she said. “But if there is a deal to be made, the technical experts are the ones who will get it done.”