Reference No.: 42080528
Date: 1442/11/18
Attachments: None

Circular

To:
The Honorable,
Peace be upon you, and Allah's mercy and blessings.

Subject: Mechanism for Dealing with E-Commerce Payment Service and Support Providers.

Based on the authorities granted to the Saudi Central Bank (SAMA) under the SAMA System issued by Royal Decree No. M/36 dated 11/4/1427H, the Banking Control System issued by Royal Decree No. M/5 dated 22/07/1386H, and Cabinet Resolution No. (276) dated 02/05/1440H, which confirms SAMA's jurisdiction over the payment and financial settlement sector and its services in the Kingdom; and based on Article Five of the Regulatory Rules for Modern Payment Service Providers under Circular No. (61.7136.) dated 27/12/1441H, which specifies activities within the scope of payment services; and in light of Circular No. (391.000.750.05) dated 02/07/1439H regarding the availability of internet purchasing services via Mada bank cards to target new sectors within e-commerce, aligning with the Kingdom's Vision 2030 objectives for digital transformation; and considering the diverse business models of companies providing e-commerce payment services, including connection and technical support services for payments; the Saudi Central Bank wishes to clarify the following:

First: The activities and services requiring the opening of an escrow account for depositing and safeguarding payment service providers' customers' funds are considered specified services within the scope of payment services as stipulated in Article (5-1) of the Regulatory Rules for Payment Service Providers, and companies providing these services must obtain a license from the Saudi Central Bank and comply with the requirements set forth in the Rules.

Second: Payment Technical Services for e-commerce payment operations are considered supporting services to payment services, and do not currently require a license from the Saudi Central Bank. Companies providing these services must obtain all necessary technical approvals from Saudi Payments, and their services must be limited exclusively to connection and technical support, excluding the following aspects:

• Direct contracting with merchants, registering them, and carrying out compliance procedures to verify the accuracy of merchant data and information, ensuring adherence to Know Your Customer (KYC) principles and requirements related to combating money laundering, terrorist financing, and financial fraud.

• Financial settlement procedures and depositing funds into merchants' bank accounts.
  Accordingly, the Saudi Central Bank wishes to confirm the following:

1. Banks and financial institutions must deal exclusively with licensed payment service providers, and notify the Saudi Central Bank immediately if any unlicensed company provides payment services.
2. Banks, financial institutions, and payment service providers may contract with companies providing connection and technical support services for e-commerce payments, after verifying that they have obtained all necessary technical approvals from Saudi Payments, and in compliance with third-party outsourcing rules and related instructions and regulations, including Mada system operational and technical requirements and the Mada fee schedule.

For your information and action, effective from 01/01/2027G. Please provide the Payment Systems and Companies Supervision Department with the procedures adopted in this regard via email (PSCC@SAMA.GOV.SA). Yours sincerely,

Fahd bin Ibrahim Al-Shari
Deputy Governor for Supervision

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Distribution Scope:

• Banks and financial institutions operating in the Kingdom
• Payment service companies operating in the Kingdom
• Saudi Payments

P.O. Box 2992 Riyadh 11169, Kingdom of Saudi Arabia Tel: +966 11 463 3000 P.O. Box: 2992, Riyadh 11169 Kingdom of Saudi Arabia Tel: +966 11 463 3000