Saudi Arabia Map
Lending Middle East & Africa Paytech Trending

Saudi Central Bank Introduces New BNPL Regulatory Framework

Buy now, pay later (BNPL) companies across the globe continue to grow – particularly in the build-up to the festive period, as consumers look to offset their costs. However, despite this trend, concerns about the space remain due to a lack of regulatory oversight. In response, the Saudi Central Bank (SAMA) is now taking action.

The Saudi Central Bank has now issued new ‘Rules for Regulating Buy Now Pay Later (BNPL) Companies‘ as part of its role in supervising and controlling the BNPL companies. This decision reflects SAMA’s continuing efforts to develop the financial sector in the region and empower the fintech sector in particular.

Under the new rules, the BNPL activity is defined as any type of financing that enables a consumer to purchase goods or services without a term cost payable by the consumer.

The rules aim to regulate the licensing of BNPL companies operating in Saudi Arabia and set minimum standards and procedures required to offer BNPL services. Additionally, the development of these rules will contribute to the growth and sustainability of the sector while safeguarding consumers’ rights.

SAMA’s new BNPL rules include various provisions related to licensing requirements, internal regulatory measures such as internal policies and procedures, information security standards and measures to combating financial crimes.

Additionally, regulatory obligations designed to safeguard consumers, and establish boundaries for activities and credit, as well as provisions pertaining to supervision and compliance are included in the new rules.

BNPL’s success in Saudi Arabia and beyond

The increased regulatory rules come following significant success in the space for firms in the region. Riyadh-based BNPL platform, Tabby, announced it had raised $200million in its Series D funding round in November, achieving a valuation of $1.5billion.

Its success is reflected in the UAE, where over 4,000 stores accept Tabby Cards for in-store purchases.

This growth highlights the need for enhanced BNPL regulations – not just in Saudi Arabia or the MENA region, but across the world. By introducing a new regulatory framework for firms working in the space, the Saudi Central Bank is hoping to ensure that it can BNPL services are offered responsibly and sustainably – keeping consumers safe and ensuring the sector can continue its growth and support the economy in Saudi Arabia.

By introducing the new regulatory framework, SAMA will also hope that the BNPL space can help to modernise and diversify the Saudi Arabian economy, in line with the Saudi Vision 2030.


Related posts

Pensions Providers Must Embrace Emerging Technologies to Attract Young Savers

Jason Williams

Lifting The Weight Of Regulation

Manisha Patel

London to lead growth in RegTech investments as sector set to soar in 2017

Manisha Patel