[VIP Interview Originally Published on The Business Year]

The payments industry has seen a unique set of impacts from the pandemic. How have you reacted?

The payments industry never sleeps. To provide service 24/7, you need to make sure your staff can work remotely from wherever they are located. American Express Saudi Arabia had the legacy infrastructure for remote access and we were able to extend this facility to all staff from the start of the pandemic.

Our strategy for COVID-19 was designed around four stages—lockdown, transition, recovery and the growth stage.

For the lockdown stage, we looked at the payment services customers needed during a total lockdown. They would be ordering essentials online and driving to neighboring grocery stores and pharmacies. A positive that came out of the crisis was traditional cash users started moving to cards and other electronic payment methods. Contactless payments started to become important for the customer. The central bank reacted fast and increased the contactless limit from SAR100 to SAR300 per transaction, so people did not have to touch payment machines when entering their PINs to make small payments. Subsequently, the first behavioral shift of paying for even a small item with a credit card or phone started. The second was the increased use of credit cards for local transactions in Saudi Arabia. Previously, many only used credit cards when they were overseas and still used cash or debit cards at home. Third, we noticed our ATM usage falling because people were using less cash and more electronic/card payment methods. All card and electronic payments saw a massive growth in transaction numbers locally.

During the transition phase, consumers were buying home entertainment units such as televisions, sound systems and work from home essentials such as computers, large monitors etc. Home and garden improvement products became popular.

In the recovery stage people started to travel locally. This saw people who never considered a local holiday before going on staycations. Local tourism became more popular, for example going fishing and diving in Jeddah. That is the phase we are in now—people are changing their lifestyles.

The next stage is when people can travel internationally, though that is some time away once a vaccine is found.

What has happened to American Express Saudi Arabia's revenue in this period?

Our revenues have suffered like most companies who depend on travel and consumer spend. A large part of our revenue stream comes from international travel and corporate travel. Historically, we were never the card of choice for local spending. Thus, while we have suffered from a revenue perspective as a result of COVID-19, we have been able to re-invent ourselves as an everyday card for local spend in the Kingdom.

We have made our platform more efficient and automated a large part of our processing. Overall, COVID-19 has hurt the credit card industry in the short term but accelerated the move away from cash, an exercise that would have required a substantial marketing investment and time. In our transition to being an everyday card, we have increased our acceptance rate three fold. Our aim is to be close to parity in terms of merchant acceptance with other card schemes in Saudi Arabia. We are also incentivizing customers who use their American Express card at selected supermarkets and online merchants so that their everyday spend is captured.

What are the implications and strategy when it comes to American Express' corporate card business?

The corporate card side is interesting because these cards were predominantly used for travel and travel-related transactions. Now, we see a great deal of B2B payments being made by corporate cards. People are paying their vendors using a corporate card, which is another interesting area. We see more corporate cards being used instead of a cash per diem for corporate spending. Corporate cards will be extremely successful once the pandemic blows away.

Is American Express Saudi Arabia's strategy at the moment to expand your mass market customer segment?

The mass market customer has to be acquired digitally, so we have launched an e-apply platform where a prospect can apply for a credit card, upload their documents, and get instant approval fully online. We launched a campaign that will target various audiences for membership. This will enhance the reach of American Express from the limited reach of the traditional F2F sales. Previously, corporate and high net worth were the two leading segments for us. Gradually we expect the mass affluent base to lead the pack at least till the pandemic is over. This balances out our three portfolios.

What do you see for American Express' business in Saudi Arabia for the next year as the situation evolves pre-vaccine?

The worst is behind us, and we expect to see a gradual recovery. During the recovery, we will ensure that American Express' platforms are robust to support our digital offering. We need to make sure we have the right partnerships to support the change in our customer behavior trends. We need to ensure the merchants operating in this new reality accept our products. And, we need to enhance the online acceptance of our products. As we are a closed loop card system, we are the issuer, network and acquirer retaining the transaction with us at all times, unlike other card schemes where the transaction is handed over to various other entities. From a safety and security angle, a closed loop network is always a better option for the customer.