REGULATIONS FOR ISSUANCE AND OPERATIONS OF CREDIT AND CHARGE CARDS

In the name of Allah, the Most Gracious, the Most Merciful Saudi Arabian Monetary Agency Head Office

Customer Protection Department Number: 361000090389 Date: 26/06/1436 AH Attachments: -

Circular

His Excellency / ........................................ Bank / ........................................ General Administration

Peace, mercy, and blessings of Allah be upon you,

Subject: Updating the Regulations for Issuance and Operation of Credit Cards and Monthly Charge Cards

With reference to paragraph (d) of Article Three of the Saudi Arabian Monetary Agency Law issued by Royal Decree No. 23 dated 23/05/1377 AH, and paragraph Three of Article Sixteen of the Banking Control Law issued by Royal Decree No. M/5 dated 22/02/1386 AH, and based on the powers vested in the Agency to apply the provisions of the Banking Control Law by virtue of His Excellency the Minister of Finance's Decision No. 2149/3 dated 14/10/1406 AH.

And with reference to the Regulations for Issuance and Operation of Credit Cards and Payment Cards issued in August 2008, as well as the draft updated regulations previously sent to banks for their feedback, we enclose herewith the final version of the Regulations for Issuance and Operation of Credit Cards and Monthly Charge Cards after incorporating the appropriate comments received. We hope you will review and apply all regulations by no later than 30/07/2015, and provide us with a compliance plan within one month from this date.

With sincere regards,

Fahad bin Abdullah Al-Mubarak Governor

Distribution Scope:

• Banks operating in the Kingdom
• General Department of Banking Supervision
• General Department of Supervision of Finance Companies
• General Department of Legal Affairs
• Center of Excellence
• Saudi Credit Bureau (SIMAH)
• Ministry of Commerce and Industry

P.O. Box 2992 Riyadh 11169 Tel: 4662704 - 4662705 - Fax: 4662746 - 4662747

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Saudi Arabian Monetary Agency

REGULATIONS FOR ISSUANCE AND OPERATIONS OF CREDIT AND CHARGE CARDS

Consumer Protection Department

April 2015

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Consumer Protection Department

TABLE OF CONTENTS

Preamble: 1 Definitions: 3 Section 1: Scope of Application: 9 Section 2: Card Issuing: 10 Section 3: Credit Limits: 15 Section 4: Advertising: 17 Section 5: Information Disclosure: 19 Section 6: Cardholder dealing: 26 Section 7: Disputed Transactions: 31 Section 8: Dispute Resolution: 35 Annex 1: Calculation of APR: 41 Annex 2: Credit Card Agreement Synopsis: 45 Annex 3: Foreign Exchange: 47

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Consumer Protection Department

REGULATIONS FOR ISSUANCE AND OPERATIONS OF CREDIT AND CHARGE CARDS

Preamble:

1. These Regulations shall be applicable to the issuance and operations of all aspects of Credit and Charge Cards as issued by a regulated entity (such as Banks, Finance Companies and other Credit and Charge Card Issuers) as licensed and authorized by the Saudi Arabian Monetary Agency (SAMA), (such as VISA, MasterCard, Union Pay & AMEX). SAMA is the sole authority empowered to apply these Regulations and to take necessary measures as it deems appropriate regarding any violations of these provisions including imposing punitive charges and/or enforcement actions as applicable under the Banking Control Law and the Implementing Regulation of the Finance Companies Control Law. These Regulations are to be read in conjunction with the Banking Consumer Protection Principles and supplement the Regulations as annotated in the Updated Regulations for Consumer Financing issued in July 2014 and its subsequent updates.

2. SAMA may, at its discretion, impose a restriction on a Card Issuer under which its Credit Card authorized limit portfolio may not exceed a specified percentage of its total Credit portfolio.

3. In all cases where instruction or information is required from Cardholders, Card Issuers may accept Authenticated Communication unless otherwise specified.

4. In all cases where instruction or information is required to be sent to Cardholders, Card Issuers may use Guaranteed Communication Means unless otherwise specified.

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Consumer Protection Department

5. Card Issuers must include details about the Card Issuer's credit advisory services in all monthly statements, default notices and any other correspondence or communications regarding the Cardholder's account.

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Consumer Protection Department

DEFINITIONS

"Adequate Notice": Notice to a Cardholder that sets forth clearly the pertinent facts so that the Cardholder may reasonably be expected to have noticed it and understood its meaning. The notice may be given by Guaranteed Communication Means reasonably assuring receipt by the Cardholder.

"Advertisement": A commercial message in any medium that promotes, directly or indirectly, a Credit or Charge Card product.

"Annual Percentage Rate or APR": The discount rate at which the present value of all payments and installments that are due from the Cardholder, representing the total amount payable by the Cardholder, equals the present value of all payments of the Amount of Credit available to the Cardholder on the date on which the Credit amount is available to the Cardholder, calculated in accordance with Annex 1.

"Authenticated Communication": Cardholder instructions received through recorded, verifiable and retrievable medium either paper, electronic or verbal.

"Billing Cycle": The interval between the days or dates of regular periodic statements. These intervals shall be equal and no longer than a quarter of a year. An interval will be considered equal if the number of days in the cycle does not vary more than four days from the regular day or date of the periodic statement.

"Business Card": shall mean a Credit or Charge Card issued for the purposes of purchasing goods or services on behalf of a Corporate Entity, where the Corporate Entity bears liability for all amounts charged to the Credit or Charge Card.

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Consumer Protection Department

"Business Day": A day on which the Card Issuers are open for business to the general public.

"Calendar Day": Any day in a month, including weekends and holidays and based on the official calendar of Saudi Arabia: Umm Alqura Calendar.

"Card Association": shall mean VISA, MasterCard, American Express, Union Pay and Diners Club or similar institutions. Also known as "Payment Systems Operators".

"Cardholder": shall mean (a) a holder, or an applicant to become a holder, of a Credit or Charge Card issued by the Issuer or (b) a holder, or an applicant to become a holder who has agreed with the Issuer to pay all obligations arising from the issuance of a Supplementary Credit or Charge Card to a Designated Individual. He/She is the Primary Cardholder. A Cardholder may be a natural person or a Corporate Entity as applicable.

"Card Issuer": An authorized entity that issues a Credit or Charge Card.

"Card Limit": The credit line made available to a Credit or Charge Cardholder under a Credit or Charge Card Agreement.

"Cash Advance": a transaction to withdraw cash by the Cardholder against his/her Credit or Charge Card Limit. A Cardholder receives a Cash Advance when they:

• Withdraw cash from an ATM.

• Withdraw cash from any other source.

• Make a wire transfer.

• Receive any other mode of cash advance as stipulated by the Card Issuer.

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Consumer Protection Department

"Charge Card": a card similar to a Credit Card but one that requires the Charge Card holder to repay the full outstanding amount upon receipt of the account statement or on the due date as per the account statement.

"Corporate Card": shall mean a Credit or Charge Card issued to an employee or Officer of a Corporate Entity where, under the terms of use of the card: a. The Corporate Entity bears liability for any amounts charged to the card. b. The employee or Officer and the Corporate Entity bear liability on a joint and several basis for any amounts charged to the card: or c. The Corporate Entity bears responsibility for any amounts charged to the card for the purposes of the business of the Corporate Entity.

"Corporate Entity": shall mean a corporation, partnership or sole proprietorship.

"Credit": the right to defer payment of debt or to incur debt and defer its payment. Credit is extended by a Card Issuer under a plan in which: a. The Card Issuer reasonably contemplates repeated transactions. b. The Card Issuer may impose a Term Cost from time to time on an outstanding unpaid balance. c. The amount of credit that may be extended to the Cardholder during the term of the plan (up to any limit set by the Card Issuer) is generally made available to the extent that any outstanding balance is repaid.

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Consumer Protection Department

"Credit Bureau": A licensed national credit bureau offering consumer and commercial credit information services to respective members in the Kingdom of Saudi Arabia.

"Credit Card": shall mean a card which is issued by an Issuer in association with Credit Card Associations. The card so issued is used by a card holder to obtain in advance, by virtue of the Issuer's credit, money, goods, services or other benefits from businesses accepting this card domestically and internationally, and repay the relevant indebtedness thereafter or in accordance with other arrangements. This definition includes Corporate Cards and Business Cards but does not include other types of cards issued such as Debit cards, ATM cards and/or pre-paid cards.

"Credit or Charge Card Agreement": means an agreement for a Credit or Charge Card between the Card Issuers (as licensed and authorized by the Saudi Arabian Monetary Agency "SAMA") and a "Cardholder".

"Default": any breach of the terms and conditions of the Credit or Charge Card Agreement and the non-payment by a Cardholder of his/her monthly installment for 90 Calendar Days from its due date.

"Default Notice": a notice from a Card Issuer to a Cardholder notifying the Cardholder that he is delinquent in payments.

"Designated Individual": a natural person who has been nominated by a Cardholder to be a holder, or an applicant to become a holder, of a Supplementary Credit or Charge Card issued at the Primary Cardholder's instructions.

"Fraud": a deliberate act to dishonestly obtain a benefit (e.g. money, a product or a service).

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Consumer Protection Department

"Grace Period": the date by which, or the period within which, any Credit extended for purchases may be repaid without incurring a Term Cost. If a Grace Period is provided, that fact must be disclosed. If the length of the Grace Period varies, the Card Issuer must disclose the range of days or the minimum number of days in the Grace Period, if the disclosure is identified as a range or minimum.

"Gross Salary": basic monthly salary (less GOSI and pensions contributions) plus all fixed allowances paid to the Cardholder by the employer on a monthly basis.

"Guaranteed Communication Means": registered mail, hand delivery, and any recorded, verifiable and retrievable electronic medium.

"Initial Disclosure": the information required to be provided to the Cardholder by a Card Issuer upon opening a Credit or Charge Card account.

"Optional Feature": features and services which are not part of the standard features or services of the Credit or Charge Card product, requiring payment of additional fees or term cost by the Cardholder.

"Outsourcing": an arrangement under which a third party (i.e. the service provider) undertakes to provide to a Card Issuer a service previously carried out by the Card Issuer itself or a new service to be launched by the Card Issuer. Outsourcing can be to a service provider in Saudi Arabia or overseas and the service provider may be a unit of the same Card Issuer (e.g. head office or an overseas branch), an affiliated company of the Card Issuer's group or an independent third party and is subject to the requirement to fully comply with SAMA Rules on Outsourcing.

"Primary Cardholder": a person in whose name a Credit or Charge Card Account is maintained.

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Consumer Protection Department

"Profit Rate": applies to credit extended under Sharia Compliant contracts. It means the rate used to derive profits and is expressed as an annual percentage rate 'APR'.

"Risk": the potential of any activity to damage the Issuer entity.

"SAMA": the Saudi Arabian Monetary Agency.

"Satisfactorily Resolved": resolution of the error/dispute in accordance with the procedures and timeframes for resolving disputes.

"Term Cost": the amount of the Term Cost payable by the Cardholder and it may be represented as a fixed or variable percentage of the outstanding balance on the Credit card account.

"Unauthorized Use": the use of a Credit or Charge card by a person, other than the Cardholder, who does not have actual, implied, designated or apparent authority for such use, including card skimming.

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Consumer Protection Department

SECTION ONE SCOPE OF APPLICATION

Application of the Regulations ARTICLE 1 These Regulations will apply to both Credit and Charge Cards, unless a specific exclusion is noted in the relevant article and will apply to salaried and non-salaried applicants.

ARTICLE 2 These Regulations are the complete Regulations for the issuance and operation of Credit and Charge Cards in the Kingdom of Saudi Arabia. They will take precedence over any other regulations issued previously.

ARTICLE 3 These Regulations will cover Credit and Charge Cards issued by any regulated entity, licensed by SAMA.

ARTICLE 4 Companies subject to the provisions of the Implementing Regulation of the Finance Companies Control Law may extend Credit Cards without collateral, based on their Risk assessment methods.

ARTICLE 5 Credit and Charge Cards issued by Finance Companies are not subject to the restrictions on fees and commissions stipulated in Article (83) of Implementing Regulation of the Finance Company Control Law as well as Article (9) in the updated Consumer Finance Regulations (July 2014).

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Consumer Protection Department

SECTION TWO CARD ISSUING

General Requirement ARTICLE 6 All Credit Agreements