Payments and Settlements Regulations and Standards
Regulation Types
The UAE ‘Regulatory Framework for Stored Values and Electronic Payment Systems’, issued on 13 December 2016, is the basis on which the Central Bank of the UAE licenses and regulates Stored Value Facilities (SVF) in the UAE. Due to technological advances, the rapid development of stored value products and services, and enacted CBUAE Laws that grants the CBUAE additional, specific supervisory powers, the existing SVF regulatory framework has been reviewed and is being amended.
The relevant articles of the CBUAE Law include:
(a) Article 65, which require the provision of SVF services to be subject to a licensing regime administered by the CBUAE; and
(b) Articles 67 – 71, which provide the statutory basis for the CBUAE’s powers to license and supervise SVF activities.
Rulebook
Robust Financial Infrastructure Systems are essential to monetary and financial stability, the smooth and efficient operation of the financial system, and the effectiveness of international financial centres.
CBUAE’s policy objective is to promote and ensure the safety and efficiency of the nation’s financial infrastructure. This regulation focuses on LVPS - financial infrastructure to support wholesale financial activities in the UAE. It covers the LVPS licensing requirements, obligations and ongoing requirements.
The CBUAE Law expressly sets out the CBUAE’s powers on the licensing, designation, oversight and enforcement of financial infrastructure systems that are systemically important, including LVPS. The Law also considers the payment and settlement finality for all transactions conducted through financial infrastructure systems that meet one of the designated conditions of Article 126 (2) of the CBUAE Law.
Rulebook
The CBUAE Law makes it responsible for licensing, designating and overseeing systemically-important Retail Payment Systems (RPS). The Law sets out the CBUAE’s powers, and stipulates the criteria and relevant factors on which the CBUAE determines whether a licensed RPS should be designated, subject to the CBUAE’s ongoing oversight.
The policy objective is to ensure the safe, sound and efficient operation of designated RPS, in compliance with relevant international standards (e.g. the Principles for the Financial Market Infrastructure), and contributing to the stability of the UAE’s financial and payment systems.
Rulebook
The RPSCSR sets out the CBUAE’s rules and conditions for granting a licence to provide RPS in the UAE.
It also requires Card Schemes to obtain a CBUAE licence, setting out the required conditions and ongoing obligations.
The CBUAE also has the right to receive information on the fees and charges of Card Schemes, and to regulate the amounts if appropriate. It requires proper contractual arrangements between (i) Banks or other Payment Service Providers providing Payment Account Issuance Services, and (ii) the Payment Service providers providing Payment Initiation and Payment Account Information Services.
Payment Service Providers wishing to participate in wage distribution, with access to the Wages Protection System, are subject to separate WPS requirements.
These digital payment services comprise eight categories:
- Payment Account Issuance Services
- Payment Instrument Issuance Services
- Merchant Acquiring Services
- Payment Aggregation Services
- Domestic and Cross-border Fund Transfer Services
- Payment Token Services
- Payment Initiation Services
- Payment Account Information Services
Rulebook
IBAN
IBAN stands for the internationally-accepted International Bank Account Number used by the International Organisation for Standardisation (ISO) 13616-1:2007 to make or receive international payments. The IBAN does not replace a sort code and account number. It is an additional number with extra information to help overseas banks to identify the right account for payments. First adopted as a standard to govern European bank account numbers, IBAN was created with international standards and is applied worldwide, including in the UAE. An IBAN serves to promote faster and more reliable electronic customer fund transfers.
Business Identifier Code
The Business Identifier Code (BIC) is a unique universal identifier that follows a standard format used to identify banks and financial institutions globally. It acts as a type of international bank code when transferring money between banks, in particular for international wire transfers or payments, to facilitate automated information processing. This might also be used to exchange messages. The BIC Code structure is defined by the international standard ISO 9362:2014 and country code ISO 3166-1. It consists of 8 (or 11) alphanumeric characters, comprising a business party prefix (4 alphanumeric characters), country code (2 alphabetic characters, as defined in ISO 3166-1), business party suffix (2 alphanumeric characters) and branch identifier (a 3-character optional element, used to identify specific locations, departments, services or units of the same business party).
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Last updated on: Tuesday 06 June 2023
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