Part 2: Licensing
Article 5
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.
Article 6
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.
(11) Payment Account Service.
(12) Any other service that SAMA may decide to consider as a payment service.
Article 7
Subject to other related laws, the following services do not constitute Payment
Services:(1) Payment that is made exclusively in cash directly from the Payer to the Payee, without any intermediary intervention.
(2) The payment that is made from the Payer to the Payee through a commercial agent authorized via an agreement to negotiate or conclude the sale or purchase of goods or services on behalf of any person.
(3) Professional physical transport of banknotes and coins, including their collection, processing and delivery.
(4) The payment that is consisting of the non-professional cash collection and delivery within the framework of a non-profit or charitable activity.
(5) Services where cash is provided by a person to another as part of a Payment Transaction following an explicit request by the Payment Service User just before the execution of the Payment Transaction through a payment for the purchase of goods or services.
(6) Currency exchange operations carried out independently and outside the scope of payment services.
(7) The payment that is based on cheques, traveller’s cheques, and paperbased vouchers.
(8) Payment that is related to securities asset servicing, including dividends, income or other distributions, or redemption or sale, or by investment institutions, credit institutions, collective investment institutions or asset management companies that provide investment services and any other entities allowed to have the custody of financial instruments.
(9) Services provided by technical service providers, For example, technical services.
(10) Services based on specific Payment Instruments that can be used only in a Limited Network.
(11) Payment Transactions by a provider of electronic communications networks, in addition to electronic communications services for a subscriber to the network or services for any of the following:
(a) For the purchase of digital content and voice-based services, regardless of the device used for the purchase or consumption of the digital content and charged to the unrelated bill; or
(b) Services performed through electronic means and included in the relevant receipt as part of a charitable activity or ticket purchase.
(12) Payment Transactions carried out among Payment Service Providers, their Agents or branches for their own accounts.
(13) Payment Transactions and related services between a Holding Company and its subsidiary or between subsidiaries of the same parent company, including Payment Transactions and services that is made through Payment Services Provider belongs to the same parent group.
(14) Withdrawal services offered by means of ATM by providers acting on behalf of one or more card issuers, which are not a party to the Framwork Contract with the Payment Service User withdrawing money from a payment account, on condition that those providers do not conduct other Relevant Payment Services as referred to in Article 6.
(15) Banking business regulated pursuant to the Banking Control Law, and the activities of finance companies regulated pursuant to the Finance Companies Control Law.
(16) Money exchange business regulated pursuant to the Rules Regulating Money Changing Business, where Funds are not held on a Payment Account.
(17) Money Remittance. Article 8
A person who seeks to get a license 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 ensuing 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.
Article 9
A person who seeks to get a license of Payment System Operator, 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 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. A description of the organizational structure of the Applicant showing all departments units and functions and their main tasks;
(3) A description of the organizational structure of the Applicant showing all department units and their main functions and tasks.
(4) 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.
(5) Fit and Proper Form for Senior Positions, as determined by the Fit and Proper Requirements, issued by SAMA for all financial sectors.
(6) The Operating Rules;
(7) A description of its systems and controls and a copy of its recovery and wind-down plans where required under Paragraph (1) (f) of Article 105, and an initial self-assessment for the purposes of Article 106 of the Implementing Regulation.
(8) A detailed programme of operations (including relevant policies, procedures and a description of systems and controls) that demonstrates the ability to satisfy (on an on-going basis) the REQUIREMENTS SET FORTH under the Law and the Implementing Regulation in a format agreeable to SAMA;
(9) 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 a bank guarantee is renewable automatically until the required capital is paid up in full. This guarantee shall be released in 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.
(10) Drafts of proposed material agreements and contracts with third parties, including material agreements and contracts with related parties and external service providers; and . (11) Any other documents or information that SAMA may request. Article 10
National Payment Systems and their operators are considered licensed in accordance with the Governor's decision in this regard.
Article 11
(1) SAMA shall inform the Applicant in writing that the application reception has been accepted, upon examining and confirming that all supporting documents are correct and complete, provided that the Applicant has submitted all information and documentation necessary to satisfy the requirements stipulated in Article 8 and Article 9 of the Implementing Regulations.
(2) The Applicant must provide SAMA with any additional information or documents that it requests within thirty calendar days from the date of request unless otherwise indicated by SAMA. SAMA may reject the License application where an Applicant does not provide such documents and information to the satisfaction of SAMA within that period.
(3) SAMA may take such measures as it deems necessary to assess the extent to which the Applicant meets the requirements for licensing.
(4) SAMA shall notify Applicant in writing of its decision in relation to a License application within ninety calendar days from the date on which it notifies the Applicant that the License application is complete in accordance with Paragraph (1) of this Article.
(5) If there is a delay beyond this period of ninety calendar days referred to in Paragraph (4) of this Article, SAMA will notify the Applicant of the adjusted timeline for assessing their application.
Article 12
(1) Upon issuance of the approval of a License application, SAMA may impose limitations on the services or activities for which the Applicant has requested a License.
(2) SAMA may include a License application, such requirements as it deems appropriate. Such a requirement may be imposed so as to require the Applicant, or a Person within the Applicant’s group, to take a specified action or to refrain from taking a specified action.
Article 13
(1) SAMA may refuse the licensing application when the data, information or documents provided by the Applicant do not satisfy the requirements stipulated in Article 8 and Article 9 of the Implementing Regulation or when the additional requirements have not been met within the specified period provided that the refusal must be justified.
(2) The Applicant may submit a request to reconsider the rejected application if a period of twelve months has passed from the date of rejection or any shorter period specified by SAMA.
Article 14
(1) Applicants must establish the Licensee as a joint stock company if the applicant is either a major PI, a major EMI, or a micro EMI.
(2) In the case of an Applicant applying for a License as a Micro PI, it should be either as a joint stock company or as a simplified joint-stock or as a limited liability company.
(3) Applicants must complete the establishment within one hundred and eighty days of granting the in-principle approval and provide SAMA with copies of the Licensee’s commercial registration and article of association, reflecting the licensed activities in accordance with the in-principle* approval.
* initial.
Article 15
(1) Upon receipt of an application submitted to SAMA by the Applicant as set forth in Article 11, SAMA may issue an in-principle approval to the applicant when it is proven to SAMA that an Applicant is able to meet the relevant License requirements. The Applicant must ensure the satisfaction of the relevant License requirements and conditions within a period of no more than one year. SAMA may, in its sole discretion, extend the preliminary approval duration for an additional 180 calendar days as a maximum.
(2) In addition to the requirement set forth in Article 14 of the Implementing Regulation, SAMA will outline in its in-principle approval all outstanding requirements that must be addressed by the Applicant in order for SAMA to be satisfied with any licensing conditions and concerns raised therein, subject to the duration set forth in Paragraph (1) of this Article.
(3) The Applicant is required to address the outstanding requirements outlined in the in-principle approval before the in-principle approval expires further to Paragraph (1) of this Article.
(4) The in-principle approval does not grant the Applicant the right to carry out any service or activity for which a License is required from SAMA under the Law.
Article 16
(1) Upon licensing, SAMA will enter the Licensee information into an online registry accessible to the public through the means determined by SAMA.
(2) A Licensee’s information entered in the register must include the following:
(a) The category of License determined for that Licensee;
(b) The services and activities for which it is licensed; and
(c) Any restrictions imposed by SAMA on the License.
Article 17
(1) A License for a Payment Service Provider shall be granted for a term of five years as a maximum.
(2) A License for a Payment System Operator shall be granted for a term deemed appropriate (in a case-by-case basis) in the sole determination of SAMA.
(3) A License may be renewed by SAMA based on a request by the Licensee, for a similar period or another period in the sole determination of SAMA, after fulfilling the requirements stipulated in the Implementing Regulation.
(4) The renewal application must be submitted to SAMA at least six months prior to the expiry of the License period or the renewed period in accordance with the application determined by SAMA.
(5) The renewal application of a Payment System Operator must be accompanied by a program of operations in a format agreeable to SAMA.
(6) The Payment Service Provider must submit a three-year business plan in addition to the following:
(a) A marketing plan taking into account existing and planned products;
(b) Relevant policies and procedures
(c) Projected financial statements, annual revenue and expenses, financial margins and targeted growth rates against the performance of the Payment Service Provider over the past three years, taking into account any modifications to its’ strategy and business plan;
(d) Projected liquidity and capital adequacy ratios against the levels of liquidity and capital solvency ratios of the past three years, taking into account any modifications to its’ strategy and business plan;
(e) The estimated ongoing finance of operations;
(f) Branch offices to be established (if applicable);
(g) Report on risk incidents sustained by the Payment Service Provider through the past three years and how the Payment Service Provider dealt with such risk incidents, including incidents of non-compliance with applicable laws, regulations, and decisions; and future plans and programs to manage risk and the compliance function;
(h) Current number of employees and the percentage of Saudi nationals thereof in accordance with the related laws and instructions at each department and each organizational level;
(i) Recruitment and training plan, including training and qualification programs for employees; and
(j) Any other documents and information that SAMA may request.
(7) The fees required for renewing the License must be paid in full at the time of the submission of the renewal application.
Article 18
The Licensee must not cease any of its services or activities totally or partially unless SAMA has granted its prior written approval and without prejudice to the Licensee’s obligations towards its Clients, creditors, shareholders, Members (as applicable) or the integrity and the stability of the financial sector.
Article 19
(1) The Licensee shall receive a non-objection letter from SAMA prior to engaging or participating in establishing any entities or any additional commercial or investment activities or commencing the practice of any of these activities.
(2) SAMA may make it a condition of a License to require the Licensee or Applicant to create a separate legal entity for such business that is beyond the scope of the Law and the Implementing Regulation if such business could:
(a) Impact the Licensee’s financial soundness;
(b) Impact the ability of SAMA to supervise the Licensee;
(c) Impact the Licensee’s ability to comply with the laws, regulations and decisions applicable to it; or
(d) Impact the Licensee in any other way as deemed by SAMA.
Article 20
The Licensee may apply for an amendment of the License for the addition or deletion of some activities or services or amendment of any term or limitation thereof. An amendment application must be based on reasonable justifications and supported by studies, documents and information and accompanied by any documents, information or studies required by SAMA.
Article 21
(1) Without prejudice to SAMA’s other powers under applicable laws, regulations and decisions, SAMA may revoke or suspend a License granted to a Licensee in any one or more of the following circumstances:
(a) A Payment Service Provider has not provided any payment services in the Kingdom for a period of at least six consecutive months;
(b) A Payment System has not processed any Payments Orders in the Kingdom for a period of at least twelve consecutive months;
(c) A Licensee notifies SAMA that it intends to cease carrying on the Relevant Payment Services or Payment System operations;
(d) A Licensee no longer meets or failed to meet the requirements of the License;
(e) A Licensee fails to inform SAMA, in accordance with the provision of Article 39 of the Implementing Regulation, of a change in circumstances that SAMA deems to be materially relevant to its compliance with the requirements of the Implementing Regulation;
(f) A Licensee has committed a material breach of a provision of the Law and the Implementing Regulation;
(g) A Licensee constitutes a threat to the stability of or trust in a Payment System as per assessment by SAMA; or
(h) SAMA deems that revocation is otherwise desirable in order to protect the interests of Payment Service users or Members or for market protection or the financial stability in the Kingdom.
(2) Subject to Paragraph (4) of this Article, before suspending or revoking a License, SAMA will notify the Licensee of the reason for the suspension or revocation and allow it thirty calendar days from the date of dispatch of the notification to appeal the decision, the appeal does not affect the validity of the suspension or revocation decision unless SAMA decides otherwise.
(3) SAMA may take the necessary measures and decisions to close or liquidate the licensed entity upon revocation of its license.
(4) Where SAMA decides to suspend a License, it may prescribe a certain period for the suspension or notify the Licensee that the suspension will continue until the licensee is able to demonstrate compliance with the licensing conditions and the Implementing Regulation provisions or completion of actions prescribed by SAMA.
Article 22
(1) A Licensee may apply to SAMA for cancellation of its License as prescribed by SAMA taking into consideration the impact on the sector’s integrity and financial stability in the Kingdom.
(2) A License cancellation Applicant must provide SAMA with the following:
(a) The reasons for the request to cancel its License;
(b) The impact resulting from its cessation of carrying out providing Relevant Payment Services or operating a Payment System;
(c) The projected date on which it will cease to carry on providing Relevant Payment Services or operating a Payment System; and
(d) The evidence of discharging, or its ability to discharge, all obligations owed to its Clients.
Article 23
(1) Upon approval of the application and prior to the issuance of the License, the Applicant shall pay SAMA the License issuance fee pursuant to Article 7 of the Law, which corresponds with the type of License being applied for, as follows:
(a) Twenty thousand Saudi Riyals (SAR 20,000) for a Micro PI License;
(b) Fifty thousand Saudi Riyals (SAR 50,000) for a Major PI License;
(c) Twenty thousand Saudi Riyals (SAR 20,000) for a Micro EMI License;
(d) Fifty thousand Saudi Riyals (SAR 50,000) for a Major EMI License;
(e) Twenty thousand Saudi Riyals (SAR 20,000) for a Payment Initiation Services License; and
(f) Twenty thousand Saudi Riyals (SAR 20,000) for a Payment Account Information Services License.
(2) In the event of an amendment of a License further to Article 20 of the Implementing Regulation, a Licensee will be subject to re-evaluation and the License issuance date will be amended in such circumstances.
(3) SAMA may review and adjust the fees mentioned in Paragraph (1) of this as it deems appropriate.
(4) SAMA determines License issuance and renewal fees applicable to Payment System Operators on a discretionary basis, commensurate with the size as well as the nature of and complexity of the Payment System Operator and the complexity of relevant operations.