Central Bank of Lebanon Circular No. 629 on the Electronic Settlement System for Credit, Debit and Charge Cards Issued in Lebanon and Used Locally at POS Terminals

Circular No. 629 To Banks, Financial Institutions, Lebanese and Foreign Companies Licensed to Issue Settlement, Payment or Credit Cards

We hereby send you a copy of Circular Decision No. 13457 dated 19/7/2022 regarding the amendment of the Electronic Settlement System relating to Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on Point of Sale (POS) Devices attached to Basic Decision No. 9668 dated 9/8/2007, subject of Circular No. 109.

Beirut, on July 19, 2022 Governor of Banque du Liban Riad Toufic Saadeh

Circular Decision No. 13457 Amendment of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on Point of Sale (POS) Devices

The Governor of Banque du Liban, based on the Monetary and Loan Law, particularly Articles 174 and 70 thereof, and based on Law No. 133 dated 26/10/1999 concerning the tasks of Banque du Liban, and based on Basic Decision No. 7299 dated 10/6/1999 and its amendments concerning foreign exchange and credit cards, particularly Article 5 thereof, and based on Basic Decision No. 9668 dated 9/8/2007 and its amendments concerning the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices, and based on the decision of the Central Bank Council taken in its meeting held on 18/7/2022, hereby decides as follows:

Article One: The text of "Article One" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby replaced by the following text: "An electronic settlement system is established at the Central Office of Banque du Liban. Through this system, the accounts of 'Subscribers' are settled as a result of using 'Cards' in Lebanese Lira locally, on Point of Sale (POS) devices; as for operations performed on these POS devices exclusively through 'Visa' and 'Mastercard' companies in US Dollars, they are settled in the related accounts opened abroad."

Article Two: The phrase 'and in US Dollars' appearing in both "Article Four" and "Article Six" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby repealed.

Article Three: The text of "Article Five" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby repealed and replaced by the following text: "In order to carry out the settlement mentioned in Article One above, Credit, Payment or Charge Card companies are required to send electronic payment messages executed in Lebanese Lira, either directly to Banque du Liban or through the 'Appointed Institution', provided that Credit, Payment or Charge Card companies remain responsible for the correctness and accuracy of the information in said messages."

Article Four: The phrase 'Current Operations Department' appearing in both "Article Seven" and "Article Ten" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby replaced by the phrase 'Payment Systems Department'.

Article Five: The text of "Article Eight" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby repealed and replaced by the following text: "Credit, Payment or Charge Card companies or the 'Appointed Institution' are required to:

1. Request the opening of an account with Banque du Liban in Lebanese Lira.
2. Freeze an amount in Lebanese Lira to ensure the settlement of operations sent by them to Banque du Liban for execution in the accounts of 'Subscribers' opened with Banque du Liban; it is designated to guarantee coverage of the debit balance resulting from the settlement referred to in Article One above, in case it cannot be paid by 'Subscribers'. Banque du Liban determines the amount to be frozen by each Credit, Payment or Charge Card company or 'Appointed Institution', which must, at the end of each working day, replenish this amount when it falls below the limit set by Banque du Liban.
3. Reimburse the operational costs and expenses incurred by Banque du Liban for completing settlement operations as specified by the latter based on the number of electronic payment messages it receives."

Article Six: The text of "Article Nine" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby repealed and replaced by the following text:

1. "On each working day, prior to 10:00 AM, full provisioning is made for 'Subscribers' in their accounts in Lebanese Lira used in the electronic settlement system and opened for this purpose.
2. If sufficient provisioning is not provided by 'Subscribers' to cover the debit balance in Lebanese Lira, the amount of said debit balance is deducted from the frozen guarantee amount referred to in paragraph (2) of Article Eight above. Furthermore, in all cases, Credit, Payment or Charge Card companies remain responsible to Banque du Liban in case the debit balance is not covered by 'Subscribers' or the 'Appointed Institution'."

Article Seven: The text of "Article Eleven" of the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices attached to Basic Decision No. 9668 dated 9/8/2007) is hereby repealed and replaced by the following text: " 'Subscribers' are required to:

• Provide their cardholders electronically with a monthly statement of all operations performed on their card accounts, and in case the customer requests a paper copy of this statement.
• Not charge customers fees or commissions exceeding the customary and recognized standards for any currency and for settlement operations referred to in Article One above."

Article Eight: The text of the model authorization letter for operating an account linked to the Electronic Settlement System for Credit, Payment or Charge Cards Issued in the Lebanese Market and Used Locally on POS (Point of Sale) Devices, subject of Basic Decision No. 9668 dated 9/8/2007) is hereby replaced by the text attached.

Article Nine: This decision takes effect as of July 25, 2022. Article Ten: This decision is published in the Official Gazette.

Beirut, on July 19, 2022 Governor of Banque du Liban Riad Toufic Saadeh

BANQUE DU LIBAN ESPT: Electronic Settlement System for Point of Sale Transactions (Transactions POS for System Settlement Electronic) Attachment for Basic Decision No. dated

Authorization Letter for Account Operation to Banque du Liban by: _________________________ (Name of Credit, Payment or Charge Card Company)

We, the Bank ______________________________ hereby authorize you with full responsibility in an irrevocable authorization, that you record your accounts opened with us in Lebanese Lira, any amount credited or debited in Lebanese Lira, contained in electronic payment messages sent by Credit, Payment or Charge Card companies or the 'Appointed Institution', resulting from or related to the use of 'Cards' locally on POS (Point of Sale) Devices, according to the provisions of Basic Decision No. dated .

To certify the correctness of the information above Chairman of the Board, Stamp