The financial technology sector in Saudi Arabia is poised for expansion as the country’s central bank, the Saudi Central Bank (SAMA), has released regulations pertaining to buy now, pay later (BNPL) companies. The new guidelines are designed to govern the licensing process and establish minimum standards for BNPL companies.
SAMA emphasizes that the development of these regulations will promote the growth and sustainability of the sector, while also protecting the rights of users. The guidelines define BNPL as a financing activity that enables consumers to acquire goods or services without immediately incurring the full cost, which is payable over a specified period.
Read more: BNPL changing payment habits in UAE, Saudi, globally
Additionally, SAMA has introduced various provisions concerning licensing requirements, the regulation of internal policies and procedures, information security standards, and measures to combat financial crimes.
According to the guidelines, a BNPL company must have a minimum capital of SAR5 million ($1.3 million), which may be subject to adjustment by the Saudi Central Bank as it deems necessary.
One of the stipulations is that at least 50 percent of the company’s human resources employees must be Saudi nationals when the company commences operations. This requirement applies to all departments and levels within the organization.
Furthermore, the central bank has established regulatory requirements aimed at protecting consumers, defining boundaries for activities and credit, and implementing oversight and compliance regulations.
Ensuring adherence to relevant laws and regulations
The regulatory body also highlighted its commitment to ensuring the company’s adherence to relevant laws, regulations, rules, and instructions. This will involve conducting inspection visits to the company’s headquarters, engaging with its staff, and reviewing its systems, procedures, and records.
These new regulations have been introduced in response to the increasing number of companies offering pay-later services in the Kingdom. Recently, Jeel Pay, a Saudi fintech startup, obtained a permit from the bank, bringing the total number of authorized BNPL companies in the Kingdom to seven, as stated in a press release.
Ongoing efforts to support post-paid companies
This decision also contributes to the expansion of licensed and authorized financing companies to a total of 58, demonstrating SAMA’s ongoing efforts to support post-paid companies.
Aligned with the objectives of Vision 2030 and the National Fintech Strategy, the Kingdom aims to have 525 such companies, which will create 18,000 jobs and generate a direct gross domestic product contribution of SAR13.3 billion.
To achieve these goals, the Saudi Central Bank is dedicated to fostering innovation within the financial sector and improving inclusion and accessibility throughout the region.
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