(1) The terms and phrases referenced in the Implementing Regulation shall have the meanings prescribed to them in the Law of Payment and Payment Services unless the context requires otherwise.
(2) For the purpose of applying the provisions of this Implementing Regulation, the following terms and phrases, wherever mentioned herein, shall have the meanings assigned thereto unless the context requires otherwise.
Law: Law of Payments and Payment Services promulgated by Royal Decree No. (M/26) dated 22/3/1443H.
Implementing Regulation: The Implementing Regulation of the Law.
Governor: The Governor of the Central Bank.
SAR: Saudi Arabian Riyal.
PFMI: The “Principles for financial market infrastructures” issued by CPMIIOSCO on April 2012 (and any publications or amendment thereof).
Controller: a Person who, either jointly or severally, can influence the actions or decisions of the Licensee or the holding company that owns the Licensee under any of
the following cases:
(a) Holds 10% or more of the shares in either the Licensee or a Holding Company of that Licensee;
(b) Is entitled to exercise, or controls the exercise of, 10% or more of the voting rights in either the Licensee or a Holding Company of that Licensee; or
(c) Is able to exercise significant influence over the management of the Licensee as a result of holding shares of the Licensee or the holding company of the Licensee or being able to exercise voting rights connected to these shares, or having a currently exercisable right to acquire such shares or voting rights.
Holding Company: Notwithstanding the relevant provision of the Companies Law, a joint-stock, a simplified joint-stock, or a limited liability company that controls another joint-stock, simplified joint-stock, or limited liability company (that is referred to as its subsidiary) by owning more than half of the capital of such companies or by controlling the formation of their boards of directors.
Complaint: Expression of consumer or client dissatisfaction or objections, submitted to a Licensee through the available channels.
License: The license that is given by SAMA to operate a Payment System or to provide Payment Services in accordance with the provisions of the Law and the Implementing Regulation, including activities that are specified in the License. Applicant: A legal person -or who is acting on his behalf- that has applied for licensing.
Licensee: a Payment System Operator or Payment Service Provider licensed under the provision of the Law and the Implementing Regulation and the like.
Licensed Bank: A bank licensed to carry on banking business pursuant to the Banking Control Law promulgated by Royal Decree No. (M/5) dated 22/2/1386H.
Payment Service Provider: Any of the following entities:
(a) An entity licensed as a major PI, a major EMI, or a micro EMI.
(b) An entity licensed as a micro PI.
Relevant Payment Services: Any Payment Services that are activities specified in Article6 of the Implementing Regulation.
Agent: a Person that acts on behalf of a Payment Service Provider in the provision of Relevant Payment Services.
Payment Service User: Any person who makes use of, or receives, one or more Relevant Payment Services in the capacity of Payer, Payee or both; or any Person who makes use of the Relevant Payment Services of a Payment Account Information Service Provider.
Payment System Operator: The legal person licensed as an operator of one or more Payment Systems by SAMA.
Non-Systemically Important Payment System: a Payment System not designated by SAMA as a Systemically Important Payment System. National
Payment System: a Payment System owned or operated by SAMA directly or indirectly.
Service Provider Related to Payment System: The service provider that forms part of the payments system operating arrangements.
Payer: a Person who holds a Payment Account and allows a Payment Services Order from that Payment Account, or where there is no Payment Account, a person who gives a Payment Services Order.
Payee: a Person who is the intended recipient of Funds which have been the subject of a Payment Transaction.
Payment Account: An account held in the name of one or more Payment Service Users which is used for the execution of Payment Transactions.
Money Remittance: An operation where Funds are received from a Payer, without any Payment Accounts being created in the name of the Payer or the Payee, for the purpose of transferring a corresponding amount to a Payee or to a Payment Service Provider or a Person licensed under the Rules Regulating Money Changing Business acting on behalf of the Payee or to an entity with an equivalent license, or such Funds are received on behalf of and made available to the Payee.
Credit Transfer: An operation that results in crediting the Payment Account of a Payee with a Payment Transaction (or a series of Payment Transactions) which is carried out in accordance with the instruction given by the Payer through his Payment Account with the Payment Service Provider.
Service: A service (as an on-line tool or otherwise) to initiate a Payment Services Order at the request of a Payment Service User in connection with his Payment Account with the Payment Account Service Provider on the basis of Consent provided by that Payment Service User.
Payment Account Service Provider: a Payment Account Service Provider, including the licensed bank, which provides and maintains a Payment Account for the Payment Service User.
Payment Instrument: Any tools or procedures provided by the Payment Service Provider to the Payment Service User, which is used to initiate Payment Services Orders through the online channels or otherwise.
Card-Based Payments: The Payment Instrument provided by the Payment Service Provider through a card used to initiate a Payment Transaction from a Payment Account held with another Payment Service Provider.
Closed Loop Account: The monetary value stored on a Payment Instrument and is issued by a one-off issuer, which cannot be redeemed in cash or to any other account, which can only be used to acquire goods or services within a limited network of service providers that have direct commercial agreements with the issuer and are in the same corporate group or are otherwise affiliated by the same commercial name or trademark. Restricted Loop Account: The monetary value stored on a Payment Instrument, which cannot be redeemed in cash or transferred to any other account and can only be used to acquire goods or services within a clearly defined area, goods or services within a limited network of service providers which have direct commercial agreements with the issuer. Limited Network Service: Payment Transactions made using a Closed Loop Account or a Restricted Loop Account. Payment Services Order: Any instructions by a Payment Service User acting as Payer or Payee to its Payment Service Provider, requesting the execution of a Payment Transaction. One-off Payment Contract: A contract for a one-off Payment Transaction not made under a Framework Contract. Framework Contract: A contract for Relevant Payment Services which is intended to govern the subsequent execution of individual and successive Payment Transactions. Electronic Money: Electronically (including magnetically) stored monetary value as represented by a claim on the issuer, which is issued on receipt of Funds for the purpose of making Payment Transactions and accepted by a Person other than the issuer as means of payment (excluding virtual assets). Electronic Money Institution or “EMI”: an entity that is licensed to issue Electronic Money.
Electronic Money Distributor: a Person that distributes or sells Electronic Money or redeems Electronic Money on behalf of an EMI but does not provide any Payment Service (including the issuance of Electronic Money) or act as an Agent of the EMI. Safeguarded Funds: Means safeguarded funds according to the following cases: (a) For Payment Institutions, Funds received from, or for the benefit of, a Payment Service User for the execution of Payment Transactions, or Funds received from another Payment Service Provider for the execution of Payment Transactions on behalf of a Payment Service User; and (b) For Electronic Money Institutions (and Electronic Money Distributors), Funds received in exchange for Electronic Money that has been or is to be issued and does not include deposits held at banks. Cash-Out Transaction: The redemption and withdrawal of Electronic Money at par value. Total Average Outstanding Electronic Money: The arithmetic means of the total amount of financial liabilities related to Electronic Money issued by the EMI at the end of each calendar day over the last twelve calendar months. Total Outstanding Electronic Money: The total value of Electronic Money issued by an EMI, calculated on the first day of each calendar month and applied for that calendar month. Payment Institution or “PI”: a Payment Service Provider licensed to provide one or more Relevant Payment Services, except for the issuing of Electronic Money. Accounting Records: Underlying documents and information (stored electronically or otherwise) used to prepare, verify and audit financial statements. Average Monthly Payment Transaction Value: The rolling monthly average over any period of twelve calendar months preceding the date of calculation of the total amount of Payment Transactions executed by the Payment Service Provider, including Payment Transactions executed by its Agents, and does not include the issuance or redemption of Electronic Money.
Authentication: A procedure (that may be subject to further SAMA’s regulations, rules, circulars, controls or instructions, including those related to cyber security) which allows a Payment Service Provider to verify the identity of a Payment Service User or the validity of the use of a specific Payment Instrument, and “Authenticated” shall be interpreted accordingly.
Consent: The authorization by an Authenticated Payer of a Payment Transaction, recorded in accordance with Article 38 of the Implementing Regulation. Personalized Security
Credentials: Personalized features provided by a Payment Service Provider to a Payment Service User, which can be used for the purposes of Authentication. Fit and Proper Requirements: The rules, instructions and requirements issued by SAMA and all amendments thereto which includes the standards of competence and propriety for Senior Positions of Payment System Operators and Payment Service Providers. Senior
Positions: The functions, roles and responsibilities entrusted to those positions who take strategic decisions or manage the Licensee’s business processes, including the board of directors and senior management, according to the positions specified in the Requirements for Appointments to Senior Positions.
Fit and Proper Form: The form issued by SAMA in accordance with the Requirements for Appointments to Senior Positions.
Operating Rules: The operating rules of a registered Payment System.
Outsourcing Rules: The regulations, rules, circulars, principles and instructions related to third-party outsourcing, issued by SAMA, with the aim of regulating the provisions of assigning activity to a third party.
Unique Identifier Number: The account number of the Payment Service User. Unauthorized Payment
Transactions: The payment transactions that are initiated by a non-user of Payment Services without the authority to initiate them.
The objectives of the Implementing Regulation are:
(1) Enacting the framework and regulatory requirements of payment service operators and providers in the Kingdom, particularly in determining the relevant licensing, supervision and oversight procedures and requirements.
(2) Ensuring the presence of the necessary mechanisms to manage the risk of Payment Systems and Payment Services, which may affect the payment sector and monetary and financial settlement; and
(3) Contributing to the enhancement of transparency and fair competition with the aim of supporting the effective and efficient functioning of payment systems and monetary and financial settlement.
(4) Incentivizing and developing the payment systems and services sector by SAMA.
(1) SAMA shall carry out its duties and authorities set out in the Law and all relevant regulations and policies, taking into consideration best international standards and practices.
(2) SAMA shall carry out the supervision and oversight functions on Relevant Payment Services, in particular, the following:
(a) Licensing entities to engage in one or more Relevant Payment Services in accordance with the Law and the Implementing Regulation;
(b) Issuing regulations, rules, instructions, and circulars relating to the provision of Relevant Payment Services and its amendments;
(c) Ensuring the compliance of Payment Service Providers with the Implementing Regulation and all related regulations, rules, instructions, and circulars issued by SAMA;
(d) Ensuring and supervising the licensed Payment Service Providers and the Senior Positions adherence to the highest standards of corporate governance;
(e) Taking enforcement or remedial action in respect of contraventions of the provisions of the Law, the Implementing Regulation and all related regulations, rules, instructions, and circulars issued by SAMA;
(f) Dealing with Complaints and mechanisms for resolving them;
(g) Creating and maintaining a public register of Payment Service Providers; and
(h) Suspending or revoking licenses of Payment Service Providers in accordance with the powers of SAMA pursuant to the Law.
(3) SAMA shall carry out the supervision and oversight functions on Payment Systems, in particular, the following:
(a) Licensing the entities to operate Payment Systems in accordance with the Law and the Implementing Regulation;
(b) Designating Payment Systems according to the Criteria of Systemically Important Payment System;
(c) Issuing regulations, rules, instructions, and circulars relating to the operation of Payment Systems taking into consideration the PFMI;
(d) Ensuring and monitoring the compliance of Payment System Operators with the Law, Implementing Regulation, and related regulations, rules, instructions and circulars issued by SAMA;
(e) Carrying out the specific authorities in relation to Payment Systems, including but not limited to ensuring the execution of Settlement Finality and bankruptcy of Payment Systems and their Members;
(f) Ensuring and overseeing the Payment System Operators and the Senior Positions adherence to high standards of corporate governance;
(g) Taking enforcement or remedial action in respect of contraventions of the provisions of the Implementing Regulation and related regulations, rules, instructions and circulars issued by SAMA;
(h) Dealing with Complaints and mechanisms for resolving them;
(i) Maintaining a public register of Payment System Operators; and
(j) Suspending or revoking licenses of Payment System Operators in accordance with the powers of SAMA pursuant to the Law.
(1) The Implementing Regulation apply to all Persons that carry out Relevant Payment Services in the Kingdom if any of the following apply:
(a) Provides Relevant Payment Services from an establishment located in the Kingdom;
(b) Holds itself out by any means as providing a Payment Service in the Kingdom;
(c) Invites or induces a Person located in the Kingdom to enter into, or offer to enter into, an agreement in relation to a Payment Service;
(d) Markets or otherwise promotes any Payment Service to one or more Persons in the Kingdom; or
(e) Appoints another Person operating from an establishment located in the Kingdom where such appointee:
(i) Has a mandate to provide a Payment Service in the Kingdom on behalf of the appointer;
(ii) Accustomed to act in accordance with the instructions of that appointer; and
(iii) Provides a Payment Service on the appointer’s behalf or invites or induces a Person in the Kingdom to enter into, or offer to enter into, an agreement in relation to a Payment Service.
(2) The Implementing Regulation apply to all Persons that carry out Payment System operating -whether the Payment Systems Operator is established in the Kingdom or abroad or whether the Payment System is operated in the Kingdom or abroad - if any of the following apply:
(a) The Payment System operating rules specified rules and conditions for enabling Credit Transfers relating to Payment Transactions initiated by Payers or Payees residing in the Kingdom; or
(b) The Payment System provides services for the handling and settling of Payment Orders to Members residing in or operating in the Kingdom.
SAMA may approve or reject a licensing application as a Relevant Payment Service Provider or Payment System Operator, taking into account the following:
(1) Whether the activities and services are consistent with the objectives of the Law and the Implementing Regulation;
(2) Whether the activities and services are consistent with the consumer protection and competition objectives set out in the Law and the Implementing Regulation;
(3) The economic value resulting from providing the activities in the Kingdom and the impact of these activities on financial stability in the Kingdom;
(4) SAMA assessment of the Applicant’s ability to satisfy the requirements of the Law and the Implementing Regulation; and
(5) Whether there are factors that might hinder SAMA’s ability to oversee the applicant effectively.
SAMA licenses the payments service provider to practice one or more of the following services when conducted as a business or as usual:
(1) Services enabling Funds to be deposited on a Payment Account as well as all the operations required for operating a Payment Account;
(2) Services enabling cash withdrawals from a Payment Account as well as all the operations required for operating a Payment Account;
(3) Execution of Payment Transactions, including Credit Transfers on a Payment Account with the user’s Payment Service Provider or with another Payment Service Provider, which include the following:
(a) Execution of Direct Debits, including one-off direct debits;
(b) Execution of Payment Transactions through a payment card or a similar digital device; and
(c) Execution of Credit Transfers, including standing orders.
(4) Execution of Payment Transactions where the Funds are covered by a credit line for a Payment Service User:
(a) Execution of Direct Debits, including one-off direct debits;
(b) Execution of Payment Transactions through a payment card or a similar device; and
(c) Execution of Credit Transfers, including standing orders.
(5) Issuing of Payment Instruments;
(6) Payee transactions Acquiring;
(7) Payment Aggregation Services;
(8) Issuing Electronic Money (by opening e-wallets or otherwise);
(9) Payment Initiation Services; and (10) Payment Account Information Services.
A person who seeks to get a licensce of Payment Services Provider, or his representative, shall apply to SAMA for a License and provide the following:
(1) An application form as may be required by SAMA;
(2) A detailed specification of each of the services set out in Article 6 for which a License is requested;
(3) A draft of articles of incorporation and articles of association of the Applicant, or the authenticated copies if the Applicant is incorporated outside the kingdom, subject to the related laws in the Kingdom;
(4) A description of the organizational structure of the Applicant showing all department units and their main functions and tasks and the details of the Senior Positions roles;
(5) A list of all controllers, which sets out the number and percentage of ownership that each controller will own; with submitting the Fit and Proper Form for controllers signed by each controller, as determined by the Requirements for Appointments to Senior Positions, issued by SAMA for all financial sectors.
(6) The Fit and Proper Form for Senior Positions, as determined by the Requirements for Appointments to Senior Positions, issued by SAMA for all financial sectors.
(7) A feasibility study shows the target segment, the services to be provided, the proposed business model, and the strategy of the Applicant and signed by the Applicant.
(8) A three-year business plan that sets out at least the following:
(a) A detailed description of the activities for which a License is requested, products and a marketing plan;
(b) Estimated financial data, projected annual revenue, expenses, financial margins and targeted growth rates, taking into account the requirements of capital adequacy and liquidity assessments of SAMA;
(c) Projected establishment costs and funding thereof;
(d) Projected ongoing financing of operations;
(e) Expansion Plan and branch offices to be established in the Kingdom – if any -;
(f) Plan and programs for monitoring and managing risks and ensuring the effective management of the compliance function;
(g) Recruitment and training plan, including the projected number of employees and the percentage of non-Saudi nationals, in accordance with the related requirement, in each department and each organizational level, and the qualification programs for employees; and
(h) Information on other commercial and investment activities beyond the scope of the Law and the Implementing Regulation that the applicant will conduct directly or under its control or direction (including through a subsidiary); and
(9) Relevant draft policies and procedures demonstrating the ability to comply with the requirements set forth under the Law and the Implementing Regulation and any other instructions from SAMA;
(10) An irrevocable bank guarantee issued in favour of SAMA by one of the Licensed Banks in the Kingdom for an amount equivalent to the required minimum capital for the licensed activity or activities for which the Applicant requests to be licensed, in accordance with the model set by SAMA. Such bank guarantee must be renewable automatically until the required capital is paid up in full in accordance with the Implementing Regulation. This guarantee shall be released upon the following cases:
(a) Paying up the capital in full in accordance with the Implementing Regulation. SAMA may require full or partial continuation of the bank guarantee, and may require as additional prudential requirements providing a bank guarantee for a post-licensing stage as it deems appropriate;
(b) Withdrawing the License application; and
(c) Refusal of the License application by SAMA.
(11) Drafts of proposed material agreements and contracts with third parties, including material agreements and contracts with related parties and external service providers; and
(12) The Applicant’s business continuity and recovery plans and its wind-down plan, showing how the Applicant will manage liquidity, operational and wind-down risk; if the Applicant is proposing to become a Major PI or Major EMI.
(13) Any other documents or information that SAMA may request.