STC Pay is one of the stories of telecom operators venturing in the Mobile Financial Services (MFS) space in a move to diversify their revenue streams.
In Oct 2018, telecom operator Saudi Telecom Company (STC) launched its mobile wallet service ‘STC Pay’, to diversify its revenue streams. STC Pay obtained a first mover advantage in the local telco-led Mobile Financial Services (MFS) market. The mobile wallet service offers a relatively diverse range of services like merchant payments, transfers to local bank accounts, cash withdrawals, P2P transfers, bill payments, and remittances.
The high mobile penetration of the population rate in Saudi Arabia – of 122% in 2019 – combined with a relatively high number of expats – 38% of the population in 2019 – have represented a fertile ground for the uptake of MFS in the country, especially international remittances. In addition, customers’ need for easier and affordable methods to transfer money domestically and internationally can further support telco-led MFS. It is worth noting that STC has a strong foothold in the mobile market with a 37% subscriber share in 2019 – circa 15.6 million subscriptions.
STC Pay is making rapid progress
All these drivers helped STC Pay attract more than 500 thousand users to their services in 2019, a number that progressed to 4.5 million users by Nov 2020 – within just two years from launch.
Moreover, international remittances giant ‘Western Union’, who played a key role in STC Pay’s initial success as a partner for the international remittances, acquired in November 2020 a 15% stake in STC Pay for US$200 million. The completion of the deal is subject to receiving all regulatory approvals.
GlobalData’s regional insider report series ‘Mobile Financial Services: Service Portfolio Evolution and Positioning Strategies’, further analyzes how telcos are evolving and positioning themselves in the MFS market.