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GCC Digital Payments and Wallets Solutions Flourish with Four New Licenses in Saudi Arabia, as Three States Move to Further Enhance Their FinTech Ecosystems

Digital and online payment solutions continue to flourish in the Gulf Cooperation Council (GCC) countries with The Saudi Arabian Monetary Authority (SAMA) licensing two digital wallet companies, Bayan Payments (Bayanpay) and Halalah in February 2020. This comes after their successful graduation from SAMA’s regulatory sandbox.

The Saudi central bank has the mandate inter alia to license, control, and oversee the payments sector in the Kingdom as per the Council of Ministers Resolution No. 226, which saw the issuance of the relevant regulations on digital payments solutions on 30 January 2020. This was followed by the licensing of the first two payment services providers (Financial Technology Institutions), which were an Electronic Wallet Company and a Payments Institution Company. With these latest licences issued in March 2020, SAMA has now licensed four payment services providers to date.

In a statement, SAMA emphasised “its constant pursuit to support the payment and Fintech eco-system and to boost the level of effectiveness and flexibility of financial transactions, as well as to enhance innovations in the provided financial services. This is being done while observing international standards and ensuring the financial stability and fair treatment of transactions. Furthermore, this comes in tandem with the aspirations of the financial sector development program, which is part of the Kingdom’s 2030 vision, and to achieve one of the vision’s most important strategical goals, which is moving to a cashless society.”

Also in March, SAMA published the Additional Licensing Guidelines and Criteria for Digital-Only Banks in Saudi Arabia.  It issued these guidelines and criteria to keep up with the developments in the financial and information technology sectors and to achieve the objectives of the Financial Sector Development Program (FSDP) and Saudi Vision 2030 by developing the digital economy. These guidelines and criteria include the minimum requirements to be met for obtaining a license to establish a digital-only bank in Saudi Arabia. They complement the existing Banking Licensing Guidelines and Minimum Criteria. SAMA emphasizes that it is important to obtain a license prior to engaging in any banking activity in Saudi Arabia.

Another GCC financial jurisdiction keen on enhancing its FinTech ecosystem is Dubai International Financial Centre (DIFC), which in February 2020 signed a Memorandum of Understanding (MOU) with Tribe Accelerator, the first Singapore government supported Blockchain accelerator, to collaborate on knowledge sharing.  DIFC and Tribe Accelerator recently partnered on the first Dubai edition of the Tribe Demo Day which showcased nine growth-stage companies with compelling use cases utilising blockchain technology, ranging from Series A to Post-IPO funding stages across verticals such as Media & Advertising, Data, FinTech, Healthcare, Supply Chain and Trade Finance.

DIFC’s FinTech ecosystem has more than 100 FinTech companies in the Centre, reflecting a three-fold growth in registered FinTech firms since the end of 2018. In neighbouring Abu Dhabi, First Abu Dhabi Bank (FAB), the UAE’s largest bank, launched on 2 March a new “payment as a platform for merchants, consolidating a full range of payment needs into a single, digital-first package.”

The platform can converge card payments, new payment methods including domestic and international digital wallets, loyalty programs, QR solutions, and value-added services such as buy-now-pay-later and easy-instalment plans, onto a single service layer. It will also support users in launching their own offerings, such as gift cards or prepaid cards. Merchants can connect to the platform through a single API-driven integration, where they will be able to access the complete scope of built-in payment services.

FAB stressed that this was first product of its type and scale offered to UAE businesses, the proposition offers merchants a single and secured payment platform. It allows merchants and large corporates to accept frictionless in-store, mobile and online payments.

Hana Al Rostamani, Group Head of Personal Banking at First Abu Dhabi Bank, emphasised that the payments industry is going through significant disruption, and retailers and merchants face ever-increasing technology investments and integration costs to keep pace as the market evolves.

“Payment as a platform is a unique offering to solve these challenges and simplify the payment process for all parties. FAB will partner with retailers and merchants not only to optimise their technology investments, but to also drive a unified customer experience, and to support real-time offers and campaigns to promote growth. We will continue to invest in the right strategic payment platforms to support our customers’ needs and help them grow stronger,” he added.

In addition to payment layers, this service from FAB provides the merchants an omni-channel solution to deliver a unified customer experience across multiple brands, locations or touch points. It also provides AI-driven data monetisation tools that drive real-time campaigns utilising brand affinity and brand referral models. FAB aims to continuously update the platform to integrate new features and payment methods, which will be available seamlessly to all FAB merchants through this platform.

“Our platform allows merchants to keep up with the rapid pace of change in payments technology, without needing to invest funds and resources to integrate each new payment system. In addition, merchants will have access to all these new developments through a single interface. As a strategic partner, our ambition is to help merchants focus on growing their core business, while FAB seamlessly takes care of the payment technology for them,” explained Ramana Kumar, SVP and Head of Payments at FAB.

FAB’s payment platform was launched as a pilot with a selection of large retailers and will be rolled out at a larger scale to the entire FAB merchant base in the coming months.

In another move FAB has also partnered with Alipay to better connect UAE merchants with the growing number of Chinese residents and tourists via the acceptance of China’s largest online and mobile payments provider.

FAB provides payment processing services to over 27,000 merchants across the UAE. This partnership will enable Alipay’s 900 million China users to pay at an expanded range of retailers in the UAE with a seamless payment experience.

This partnership benefits the large numbers of Chinese population currently residing in the UAE and the increasing number of Chinese tourists who visit the UAE every year. More than 200,000 Chinese people reside in the UAE, and the Department of Culture and Tourism of Abu Dhabi, at the time of writing, expected 600,000 Chinese tourists to visit the emirate by 2021.

“The UAE,” stressed FAB’s Ramana Kumar, “is an increasingly popular destination for Chinese tourists, and Alipay acceptance is an added attraction for merchants looking to serve them. FAB continues to invest in the right partnerships to provide strategic payment platforms to merchants and this partnership enables us to simultaneously support our customers’ needs while contributing to the UAE’s goal of becoming a cashless economy.”

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