RIYADH — The Saudi Central Bank (SAMA) announced the issuance of rules regulating postpaid (Buy now, pay later - BNPL) companies. This is in line with SAMA's supervisory and oversight role over such companies, and its continuous efforts to develop the financial sector in general, and empower the financial technology sector in particular. BNPL is an alternative payment method that allows customers to purchase products and services without having to commit to the full payment of the price altogether. The rules for regulating BNPL companies aim to regulate the licensing provisions for this type of company, and to set the minimum standards and procedures necessary to practice the activity, in a way that contributes to its growth and sustainability, without neglecting the principles and rules of protecting customers of financial institutions and their rights. The rules also stipulate a number of provisions and obligations, the most important of which are provisions related to obtaining a license, internal organization provisions such as internal policies and procedures, information security requirements and combating financial crimes. There are also regulatory obligations aimed at protecting the customer, setting activity limits, credit limits, and supervision and compliance provisions. The Saudi Central Bank had previously presented draft rules for regulating BNPL to seek the viewpoints and opinions of the public and specialists regarding it in order to enhance the principle of transparency and participation. The comments and visuals were studied and taken into account in the final version of these rules. According to the rules, the duration of the license is five years, and the Central Bank has the right to renew it based on the company's request. The company submits the renewal request in writing at least 3 months before the expiration date of the license period according to the form decided by the Central Bank. The SAMA has the right to cancel the license based on the company's request, taking into account the rights of creditors, customers and the integrity of the financial system. The Central Bank may collect a financial fee as follows: SR5000 for issuing the license; SR2000 for renewing or amending the license, while the minimum capital of the company is SR5 million and the Central Bank may raise or lower the minimum as it deems appropriate. The Central Bank obligated companies to keep all customer documents, records and files in an organized, clear and secure manner, and to verify the completeness of the files and update them periodically, for a period of at least 10 years from the date of the end of the relationship with the customer. According to the rules, the Central Bank stressed that the percentage of Saudization of employees must not be less than 50 percent when the company begins its activity, at the departmental and administrative levels, and the localization of human resources must be increased annually by at least five percent of the total of these resources until the percentage is reached 75 percent, and the Central Bank may set a minimum annual increase in the Saudization rate necessary after that. The rules also confirm that the appointment of non-Saudis in the company is limited to jobs that require expertise not available in the Saudi labor market. In all cases, the company must obtain a letter from the Central Bank containing its no-objection before appointing any non-Saudi employee in the regulatory departments, after the company submits to prove that there are no Saudis available to fill the position. Article 19 of the rules stipulates that the company is obligated to examine the customer's credit record after his approval to verify his financial solvency, ability to pay, and credit behavior and document that it is not permissible to pass or impose any additional fees on the customer, and the company must follow up store practices to ensure this, and provide them with the controls required to be adhered to periodically. The rules prohibit the company from imposing fees on the customer, including fees owed to the company, stores, or a third party. This excludes any late fines or collection fees that may be imposed in accordance with the provisions of the collection regulations and procedures for individual customers. The company is also prohibited from offering any new products without obtaining a prior written no-objection certificate from the Central Bank. It is also prohibited to provide the activity to a customer who has not exceeded the age of 18 Hijri years. It is prohibited to provide the activity to a foreign customer who is not resident in Saudi Arabia except after obtaining a written no-objection certificate from the Central Bank. It is also prohibited to purchase goods or services in a currency other than the Saudi riyal and that is only after obtaining a written non-objection certificate from the Central Bank. With regard to credit limits, the regulatory rules stressed that the total outstanding financing for each individual customer must not exceed the amount of SR5000, and the Central Bank may increase or decrease the amount according to what it deems appropriate, and the number of installments granted to the customer must not exceed a maximum of 12 installments, and the means are limited collection through electronic channels and requesting cash is prohibited. In addition, the total of existing financing made through the company may not exceed 20 times of the capital and reserves except after obtaining a letter from the Central Bank containing its no objection to it. The Central Bank has the right to increase or reduce the upper limit of the total financing to the extent it deems appropriate. The company may not obtain facilities from other than licensed financing entities except after obtaining a letter from the Central Bank containing its no objection to this. The Central Bank stressed that non-compliance with the provisions of the rules is a violation of the law for monitoring financing companies, and that the rules must be implemented 30 days after the date of their publication on the SAMA'S website
