Buy now, pay later (BNPL) enterprises are subject to new regulations imposed by the Saudi Central Bank (SAMA). This is consistent with SAMA's position as supervisor and oversight body over these businesses, as well as its ongoing initiatives to advance the financial industry overall and the financial technology industry specifically. Customers can acquire goods and services using BNPL, an alternative payment option, without having to guarantee full payment of the purchase price.
In addition to regulating the licencing requirements for businesses of this kind, the regulations for BNPL companies seek to establish the minimal standards and practices required to carry out the business in a way that promotes its expansion and sustainability while upholding the values and guidelines that safeguard the rights and interests of financial institution clients.
The regulations also specify a number of duties and conditions, the most significant of which are those concerning licence acquisition, internal organisation guidelines including internal policies and processes, information security specifications, and the fight against financial crimes. In addition, there are regulatory requirements that define activity and credit limitations, provide oversight and compliance guidelines, and safeguard the interests of the consumer.
In order to strengthen the principles of openness and participation, the Saudi Central Bank had earlier issued draft regulations for BNPL to gather input from experts and the general public. The final draft of these guidelines examined and considered the feedback and images.
The licence has a five-year expiration date as per the regulations, and the Central Bank may extend it upon the company's request. The business uses the form selected by the Central Bank to submit a written request for renewal at least three months before the licence period's expiration date. Upon the company's request, the SAMA has the authority to revoke the licence while protecting the interests of creditors, clients, and the stability of the financial system.
The licence can be issued for SR 5000, and it can be renewed or amended for SR 2000. The minimum capital required for a business is SR 5 million, although the Central Bank has the authority to change this amount if it sees fit. For a minimum of ten years from the date of the termination of the customer relationship, the Central Bank required firms to maintain all client papers, records, and files in an orderly, transparent, and secure way. They were also required to regularly update and confirm the accuracy of the files.
As per the regulations, the Central Bank emphasised that the Saudization rate of employees at the departmental and administrative levels of the company must not be less than fifty percent when it starts operations. The localization of human resources must be increased annually by a minimum of five percent of the total resources until the percentage reaches seventy-five percent. After that, the Central Bank may determine the minimum annual increase in the Saudization rate that is required.
The regulations further state that non-Saudis may only be appointed to positions inside the organisation that demand specialised knowledge not found in the Saudi labour market. Before hiring any non-Saudi employee in the regulatory departments, the firm must always have a letter from the Central Bank stating that it has no objections, following which it must present documentation demonstrating that no Saudis are available to fill the post.
