UAE Central Bank issues two new regulations to strengthen payments systems

Entities dealing with large value payments and retail payment systems should comply with the new regulations by February 2022

The Government and the Central Bank have facilitated the banking industry and it is time the industry participates vigorously in this new era of nation building. The National

The Central Bank of the UAE introduced new payment regulations to improve consumer protection measures and promote its global competitiveness.

The new of rules that address the large-value payment systems (LVPS) and the retail payment systems (RPS), apply to remittance systems operating in the UAE and payment schemes that offer clearing or settlement in dirham outside the country, the central bank said in a statement on Thursday.

Companies operating these system and settlement institutions of existing large-value payment systems and retail payment systems must comply with the regulations by the end of February 2022, when the transition period expires.

The new laws will bolster the UAE’s “financial stability” and are essential for “consumer protection”.

“Payment systems are the plumbing of the financial system … a critical part of any country’s financial infrastructure,” the CBUAE governor Abdulhamid Saeed Alahmadi said.

The UAE's banking regulator has adopted various measures to improve consumer protection. The central bank, in February, issued the country’s first financial consumer protection regulatory framework that detailed conduct expected from the Emirates' licensed financial institutions.

Mr Alahmadi said that the issuance of LVPS and RPS regulations is “an important milestone to reach our objective of providing robust, efficient and accessible financial infrastructure in the UAE”.

The LVPS regulation sets standards for financial infrastructure systems that support wholesale payment activities in the UAE.

The RPS law focuses on systems for retail payments, which provide funds transfer, clearing and settlement services related to retail activities. It covers all retail payment systems irrespective of currency or means of exchange in which the transactions are executed, the CBUAE said.

“The retail payments regulation will also provide a level playing field to advance innovation … competition and financial inclusion,” Mr Alahmadi said.

Both regulations were published in the official gazette on January 31 and are now in effect.