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Licensing options for payment service provider in UAE

Oneworld MidEast
24 January, 2019

PSP offers online payment solutions that authorize merchants and sellers to accept credit and debit card payments on multiple channels including phone and online store. As we all know E-commerce is booming worldwide and consumers are happily purchasing many goods and services online.

Payment Service Provider (PSP) offers online shopping services through electronic payments by using credit card, direct debit, online bank transfer etc. while acting as a third party between banks and customers. The necessity of online banking is increasing day by day with the advancement in technology. Most PSP's offer shops online services for accepting electronic payments by a variety of payment methods including credit card, bank-based payments such as direct debit, bank transfer, and real-time bank transfer based on online banking.

As per the Regulatory Framework for Stored Values and Electronic Payment System, there are four (4) types of Payment Service Provider services (PSPs) recognized in UAE.

a) Retail PSP: Authorized commercial banks and other licensed PSPs offering retail, Government, and peer-to-peer digital payment services as well as money remittances.

b) Micropayments PSP: PSPs offering micropayments solution facilitating digital payments targeting the unbanked and under-banked segments in the UAE.

c) Government PSP: Federal and local Government statutory bodies offering Government digital payment services.

d) Non-issuing PSP: Non-deposit taking and non-issuing institutions that offer retail, Government, and peer-to-peer digital payment services.

The Entities providing the following payment services will not be subject to regulation:

  • Payment transactions using a credit or debit card.
  • Payment transactions using paper cheques.
  • Payment instruments accepted as a means of payment only to purchase goods or services provided from an issuer - closed loop payment instruments such as loyalty cards or rewards programs that a department store issues to a user to spend only in that department store
  • Payment transactions within a payment/settlement system between settlement institutions, clearing houses, central banks and PSPs
  • Payment transactions related to transfer of securities/assets (including dividends, income and Investment services)
  • Payment transactions carried out between PSPs (including their agents/branches) for their own accounts
  • "Technical Service Providers", defined as entities providing support services to PSPs but which do not handle user funds, e.g., processing and storage of transactional data; privacy protection services; data and entity authentication; IT network provision; and provision and maintenance of terminals and devices used for payment services

PSP's are allowed to operate in UAE however this activities are strictly regulated by Central Bank of UAE. Moreover the minimum capital requirement of setting up a PSP license will depended on the type of PSP you need to register in UAE. A PSP license can be set up in mainland and in certain free zones depending on the activity of PSP.

Oneworld MidEast has vast experience on setting up PSP's in UAE. We recommend you to avail an obligation free consultation.


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Oneworld MidEast

Oneworld MidEast can offer your business, start up or established the support you need to plan for the future and take make your goals reality. We are a team of specialist staff with extensive experience in international tax planning, corporate planning and support, financial reporting, management consultancy. www.oneworldmideast.net

 

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