RIYADH: Saudi Arabia’s financial technology sector is bracing for growth with its apex bank issuing rules for buy now, pay later companies, according to a statement.
The Saudi Central Bank, also known as SAMA, on Dec. 17 issued guidelines aimed at regulating the licensing and setting minimum standards for the BNPL companies.
SAMA said that developing these rules will aid the sector’s growth and sustainability while safeguarding users’ rights.
It defines BNPL activity as financing allowing a consumer to purchase goods or services without a term cost payable by the consumer.
SAMA outlined provisions related to licensing requirements, regulation of internal policies and procedures, information security standards and measures to combat financial crimes.
It noted that the minimum capital for a BNPL company must be SR5 million ($1.3 million), with the figure subject to increase or decrease by the body as it deems appropriate.
Amongst the guidelines, at least 50 percent of human resources employees must be Saudi nationals when the company begins operations, with the percentage applied to all departments and organizational levels.
Additionally, the bank set forth regulatory requirements designed to safeguard consumers and establish boundaries for activities and credit, as well as regulations pertaining to supervision and compliance.
The body further noted that it would take necessary actions to ensure the company’s compliance with relevant laws, regulations, rules and instructions, including making inspection visits to the company’s head office, meeting its staff and reviewing its systems, procedures, and records.
These new regulations come as the number of companies offering pay-later services in the Kingdom continues to grow, with the latest Saudi fintech startup, Jeel Pay, obtaining a permit from the bank last week.
This decision by SAMA brought the total number of companies authorized to practice BNPL activity in the Kingdom to seven, according to a statement.
It also increases the number of licensed and authorized financing companies to 58, reflecting SAMA’s ongoing endeavor to support post-paid companies.
In alignment with Vision 2030 goals outlined in the National Fintech Strategy, the Kingdom aims to have 525 such companies, which will create 18,000 jobs and generate SR13.3 billion in direct gross domestic product contributions.
To achieve these objectives, SAMA is focused on fostering innovation within the financial sector and enhancing inclusion and accessibility across the region.
