A prepaid payment service Issuing Programme Manager (IPM) is a regulated bank in the Kingdom of Saudi Arabia that is permitted to accept deposits, according to the Banking Control Law, issued by Royal Decree No. M/5 Dated 22.2.1386 H. The IPM operates the deposit account and collects the funds loaded onto the prepaid account. The IPM is responsible for:

a) Directly reimbursing the acquirers of the service providers (e.g. merchants) that are part of a closed loop payment device, or

b) Reimbursing acquirers through a scheme settlement arrangement if the service providers (e.g. merchants) are part of an open loop payment service.

1. Issuing activities. In order to operate a prepaid payment service programme, IPM’s have responsibility for undertaking the following activities directly, or through partners:

1. Prepaid account recruitment. These are the activities associated with marketing to prospective prepaid payment service customers, including the development and distribution of marketing materials;
2. Partner recruitment. Activities related to the recruitment of partners into the distribution network, such as an issuing processor, sellers/distributors and the load/reload network representatives (refer to 1.2.1 b);
3. Customer recruitment and account set up. Includes the processing of prepaid payment service applications from their receipt by the IPM through to the approval stage (inclusive of the collection of KYC information), setting up new prepaid accounts and the sending out of “service Terms and Conditions” to new account holders;
4. Payment product issuing. Includes all aspects related to the delivery of the payment service product to the customers, such as in the case of a prepaid card the production of the card through to the safe delivery of the card and PIN to the primary cardholder; The PIN distribution activity must be undertaken by the regulated entity (i.e. IPM);
5. Load /reload network. Relates to the receipt and processing of funds deposited onto the prepaid account. These loads/reloads can potentially be made at a number of different channels, such as affiliated merchants, ATMs, bank transfers, person to person payments or Kiosks;
6. Authorisation processing. Refers to the activities related to the approval/decline of an authorisation request associated with the prepaid payment service received by the issuer via SPAN or other payment networks;
7. Transaction processing. Activities undertaken by the issuer, from the receipt of the clearing message from the acquirer to the point at which the transaction is posted onto the primary cardholder’s account. These activities also include the research and documentation of transactions disputed by the primary cardholder;
8. Overdraft. Drawing more money than the bank accounts holds, prepaid service products are not allowed to go into overdraft;
9. Statement production. Activities related to the preparation and delivery of customer statements, which can be via postal mail, web account, email, and SMS or ATM. Paper statements shall however be issued minimum at quarter basis to the primary cardholder (at no additional cost to them) if the cardholder specifically request this option;
10. Customer service. Includes the activities associated with the handling and information storage of all general prepaid account related customer enquiries, requests and complaints;
11. Fraud investigation. Activities related to the efforts put into preventing and following up suspected or actual cases of prepaid payment service misuse (both processes and systems);
12. Usage Monitoring. Activities associated with monitoring the primary cardholder’s activities and customer due diligence that is required to ensure the programme’s on going compliance to AML and CTF regulations in force in the Kingdom of Saudi Arabia;
13. Programme management. Includes the general administrative and managerial activities involved with operating the prepaid account business, including the analysis of information generated by the programme and the strategic planning and development of the prepaid product.

2. Other participants within issuing activities.

The IPM may share some of the activities described above with third party as regulated by the "Rules on Outsourcing" issued by the Saudi Central Bank. Outsourcing may be used in order to attain a larger distribution network or reduce transaction processing costs.

Examples of organisations with whom the issuer may share issuing activities are as follows:

1. The programme manager. A programme manager may administer several aspects of a prepaid programme, which may include transaction processing and the distribution of the payment device and marketing materials;
2. The issuing processor. The issuing processor will typically send the responses to the authorisation requests and post the transactions onto the prepaid accounts. It may also manage the customer service;
3. The seller/distributor. The seller/ distributor may be an affiliated shopping mall or a merchant that distributes at a fee the prepaid payment service contracts to prospective cardholders;
4. The load/reload network. The load/reload network can include, for example, a branch or an ATM, where primary cardholders can load funds onto the prepaid account with cash or via payment with credit or debit cards, within the allowed limits for the product. In accordance with the "SAMA Rules on Outsourcing", July 2008, issuers are required to seek "no objection" from SAMA on the use of 3^rd party (merchant sites) for applying load services to prepaid accounts, where such loads shall be governed by the rules set out in section 2.3.

Table 1: Activities that the IPM could share with third parties

An acquirer of prepaid payment service is a regulated licensed bank, according to the Banking Control Law, issued by Royal Decree, No. M/5 Dated 22.2.1386 H. The acquiring business is governed by the SPAN Scheme Regulations; an acquirer can be either an ATM acquirer or a POS (merchant) acquirer or both.

An ATM acquirer is a regulated bank which is a member of SPAN and which has entered into an agreement with SAMA to acquire ATM transactions.

The POS (Merchant) Acquirer is a regulated bank which is a member of SPAN and which has entered into an agreement with SAMA to acquire Point-Of-Sale (POS) transactions & an agreement with The Merchant to provide him with POS service.

The contracting entity is the individual or Juristic persons or Government entities that enter into the prepaid payment service contract with the IPM. Please note that for the purposes of these rules, the term ‘Contracting Entity’ may not in all cases be the same as the beneficial owner of the funds held on an account, sub account or electronic record supporting the prepaid payment instrument.

For a commercial prepaid product, the contracting entity will be the Juristic person which enters into the service agreement with the prepaid issuer.

For a retail prepaid product, the contracting entity can be the individual who is either the primary cardholder or legal guardian of the primary cardholder.

If the prepaid contracting entity (an individual or a Juristic person) has selected a multi account product (e.g. petty cash card, household cards), the contracting entity will be the primary cardholder and shall determine the value of the funds transferred to secondary card records (Note: secondary cards have no access to the funds on the primary cardholder record).

When the contracting entity is a governmental entity or a Juristic person, the due diligence processes related to KYC and AML for the cardholder (see 2.3 and 2.5) may be shared between the issuer and the contracting entity. However, the issuer remains responsible for satisfactory completion of the KYC and AML requirements in accordance with prevailing regulatory requirements

The primary cardholder is the individual that uses the prepaid payment service to pay for goods and services at the point of sale and, if applicable, to withdraw cash from ATMs and utilise money transmission services. The contracting entity (an individual or a Juristic person) and the primary cardholder may be the same, but can also be different parties. For example, a guardian could be the contracting entity for a youth card issued to a child.

The term merchant refers to a Company, firm, corporation, government entity or other person who:

a) has a Merchant Account and an existing and on-going relationship with an Acquirer, and;

b) is designated to accept any payment by a cardholder using a valid Payment Card to pay for goods and/or services, and;

c) has contractually agreed to accept the payment device as a method of payment at their premises.

The Merchants Account refers to an account held with the Acquiring Bank used solely for the purposes of settlement of POS transactions. All current SAMA rules are applicable to the opening and maintenance of this account. This account must be settled on a regular basis.

SPAN operates the payments network and establishes operating rules for card payment device issuers, processors, merchants and ATMs that accept prepaid payment products. The prepaid payment services under this regulation will be accepted throughout the SPAN network, with additional acceptance through non-domestic payment networks, including the GCC countries, as agreed by SPAN.