UAE Introduces New Rules to Usher Digital Payment ERA
Jay Krishnan, Partner
Digital payment platforms are no strangers to our shores. New technological advancements are popping up in the digital arena on a regular basis. As a result, the wind sweeping through the specific sector heralds a storm that is beginning to create a resonance in the Middle East.
The Central Bank of the United Arab Emirates (CBUAE) has released the Retail Payment Services and Card Schemes Regulation, the fourth step in the process of preparing the UAE for the new dawn of the digital payment era. The Retail Payment Services and Card Schemes Regulation is the CBUAE’s attempt to ensure consumer safety when it comes to retail payment services and payment card scheme operations.
The regulation establishes a licensing framework for payment service providers who operate or intend to operate one or more of the UAE’s nine payment services or payment card schemes.
Payment account issuance, payment instrument issuance, merchant acquisition, domestic and cross-border cash transfers, payment tokens, payment aggregation, payment initiation, and payment account information services are just a few of the services available.
Khaled Mohamed Balama, governor of the CBUAE, said: “Digital innovation is rapidly reshaping the provision of domestic and global payment services, and the Central Bank of the UAE is embracing this innovation. We promote digital payments and support competition and innovation as well as the concept of interoperability while setting high standards for safety and risk management.”
The new regulations kicked in recently, and current payment service providers and card schemes have been allowed a one-year grace period to get the necessary license from the apex bank of the UAE. Balama also added, “The recent set of payment regulations promotes the pivotal role of CBUAE in fostering digital innovation while maintaining the safety and integrity of payment systems and services. CBUAE will always provide a solid foundation as the guardian of the financial infrastructure systems stability.”
The Stored Value Facilities Regulation, which was revised in November 2020 to promote the growth of e-wallets issued by financial institutions and fintech businesses, was the onset of CBUAE’s regulatory upgrading journey. The Large Value Payment Systems Regulation and the Retail Payment Systems Regulation followed the publication of the Stored Value Facilities Regulation. These regulations provide licensing and designation regimes for big value and retail payment systems, laying forth specific standards that are critical to the financial system.
Due to the Covid-19 pandemic, consumers are more trusting of digital payments because safety and convenience have been top of mind for them over the last year.
In the future, new payment technologies such as digital currencies and wallets, wearables, biometrics, contactless, and QR codes are expected to surge in popularity as consumers get more comfortable with and understand them, reducing the use of currency.
To satisfy the growing enthusiasm for the future state of remittance, a broader selection of payment solutions, insights, and technological updation is required to fulfill the need for developing payments and choices. Businesses that can accommodate numerous payment and shopping options are best positioned to whet the appetite of consumers around the globe.
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