Saudis Jazz Up Banking with Fresh BNPL Regulatory Blueprint

  • The Saudi Central Bank (SAMA) has introduced a new regulatory framework for Buy Now, Pay Later (BNPL) companies as part of its role in supervising and controlling these businesses.
  • The new rules define BNPL activity and feature provisions related to licensing requirements, internal regulatory measures, safeguarding consumers’ rights, and combating financial crimes, among other requirements.
  • The regulations are meant to aid the growth and sustainability of the BNPL sector while ensuring consumer protection.
  • This development follows the significant success of BNPL platforms in the region, highlighting the need for enhanced regulations.

The Saudi Central Bank (SAMA) has issued new ‘Rules for Regulating Buy Now Pay Later (BNPL) Companies’ as part of its ongoing efforts to develop the financial and fintech sectors in the region. The new system defines BNPL activity as any kind of financing that allows a consumer to purchase goods or services without a specific term cost payable by the consumer.

The regulatory framework aims to establish the licensing of BNPL companies operating in Saudi Arabia and sets minimum standards and procedures required to offer BNPL services. It includes provisions related to licensing requirements, internal regulatory measures like internal policies and procedures, information security standards, and measures for combating financial crimes.

Furthermore, the rules contain regulatory obligations designed to safeguard consumers and establish boundaries for activities and credit. It also includes provisions for the supervision and compliance of BNPL companies. The implementation of these regulations is expected to foster the sector’s growth and sustainability while protecting consumers’ rights.

These increased regulatory measures have come in the wake of significant success of BNPL companies in the region. Riyadh-based BNPL platform, Tabby, declared that it had raised $200million in its Series D funding round in November, attaining a valuation of $1.5 billion. The popularity of BNPL services in the region underscores the need for enhanced regulations not just in Saudi Arabia or the MENA region, but globally.

By implementing this regulatory framework, SAMA aims to ensure BNPL services are delivered responsibly and sustainably, thus safeguarding consumers and enabling the sector to continue its growth and support the Saudi Arabian economy. The SAma also hopes that this will help to modernise and diversify the Saudi Arabian economy in line with Saudi Vision 2030.