UAE Central Bank Begins Issuing Retail Payment Licenses

The Central Bank of the United Arab Emirates (CBUAE) has issued a new regulation to license retail payment services, part of its ongoing push to get the country ready for digital payments.

As Pinsent Masons notes in its analysis, the bank published the Retail Payment Services and Card Schemes (RPSCS) Regulation in July. It puts forth the rules for procuring and maintaining a license for retail payment services and operating a card scheme.

The rule provides a one-year transitional period to allow existing payment service providers and card scheme time to acquire the proper licenses.

It also says no entity can provide or promote retail payment services without a license, with the exception of exempted persons. These would typically be banks with CBUAE licenses, and even they have to notify the central bank if they plan to launch retail payment services.

The regulation recognizes nine categories of digital payments: payment account issuance services; payment instrument issuances; merchant acquiring services; payment aggregation; domestic fund transfers; cross-border fund transfers; payment token services; payment initiation services; and payment account information services.

According to the Pinsent Masons analysis, “the regime for payments licences under the RPSCS regulation will require a considerable amount of organisational planning, as the principal business of the payment services provider (PSP) must align with the retail payments service for which it was granted a payments licence.”

If the payment service provider plans to offer services beyond the scope of its license, it will need the CBUAE’s permission, and the bank may instruct the PSP to set up a separate entity to offer these services.

Learn more: Bringing UAE’s SMBs Into the Digital Economy

This change is coming at a time when major UAE corporations have become more sensitive to cash flow issues facing small businesses and suppliers, leading them to consider new payment methods, as Vivek Vaidyanathan, the head of treasury and trade solutions at Citi UAE, said in an interview with PYMNTS earlier this month.

He added that the government of UAE is also committed to supporting these businesses, with a move to push the economy away from cash and to newer forms of payment.