Payment Service Provider (PSP) is a necessity in this modern age that offers online shopping services through electronic payments by using methods like credit card, direct debit, online bank transfer etc. while acting as a third party between banks and customers. The importance of online banking services is increasing all around the world with the advancement in technology. Dubai is an international city which makes PSPs even more important for people residing here as this online method provides support for multiple payment methods and multiple currencies which is extremely necessary in Dubai.
Recently, the UAE govt. has changed the rules and regulations for PSP providers and these new rules are applied to all the emirates including Dubai. In the start of 2017, the Central Bank of UAE issued a decree that summarized these new rules and regulations for Payment Service Providers. In these regulations, the Central Bank has divided the PSPs in to following four categories:
- Government PSP: Federal & local government legal bodies that offer govt. digital payment services
- Retail PSP: Authorized commercial banks and other such licensed PSPs that offer peer to peer, retail and government digital payment services and money remittances
- Non-issuing PSP: Such non-issuing and non-deposit taking institutions that offer peer to peer, retail and government digital payment services
- Micropayments PSP: Unbanked and under-banked segments in UAE are provided with digital payments through these PSPs that offer micropayments
Through these new rules and regulations, the Central Bank has also issued the services that are allowed for these PSPs to provide to their customers. These services include:
- Money remittances
- Govt. credit/debit digital payment transactions
- Retail credit/debit digital payment transactions
- Peer to peer digital payment transactions
- Cash-in Services through which the cash placed in a payment account is exchanged for digital money
- Cash-out Services through which the cash taken out of the payment account is exchanged for digital money
Apart from this, list of those services are also mentioned in these regulations that are not allowed to be applied by PSPs. These are following:
- Technical Service Providers
- Payment transactions regarding transfer of securities or assets (like income, investment services and dividends)
- Payment transactions between two or more PSPs for their own accounts
- Payment transactions by using credit cards, debit cards or paper cheques
- Payment transactions in cash without any intermediary
- Payment transactions with a payment system between PSPs with central banks, settlement institutions and clearing houses.
- Payment instruments used for means of payment only for purchase of goods and services provided from the issuer or its subsidiary (similar to the closed loop payment instruments).
Registration Process for PSP License:
As mentioned above, there are four categories in which you can start PSP business in Dubai according to the new rules and regulations and the license for all these four PSP services (Government, Retail, Non-issuing and Micropayments) is available through Central Bank. There are several requirements for all these four capacities. The applicant has to prove in front of the Central Bank that he has a company in Dubai mainland or free zone along with having required experience and knowledge to provide digital payment services as mentioned in the license application. PSPs will also have to prove that they have minimum required capital and effective governance policies.
These regulations by Central Bank also emphasis on the establishment of the entity of Payment System Operator, that operates a fund transfer system for the circulation of digital money. The other things that should be considered for registration of PSP license in Dubai include transaction & spending limits, comprehensive user registration requirements, terms for user contracts, PSP liability requirements, data privacy, protection controls and technical security requirements.
Implementation of new Regulations:
These new rules and regulations for PSP license were issued by Central Bank on January 01, 2017 and these are enforced from that day. But a grace period of 1 year is provided to those PSPs that are working prior to the announcement of this decree.
Not only for those who want to start PSP services but even the already existed PSPs will face difficulty for new registration of their PSP licenses from the Central Bank of UAE. Riz & Mona consultancy can provide you complete guideline for registration of PSP license in Dubai. You can contact us on WhatsApp # +971 56 9971225.