The UAE Central Bank on Tuesday rolled out new rules governing stored value facilities in an effort to boost the country's digital payments services.
Stored Value Facilities (SVF) are channels through which users can store money digitally and use it to pay for goods and services. Examples of SVFs include e-wallets on mobile phones or other wearable technology, top-up cards and gift cards, among others.
The UAE's banking regulator said that through the new regulation, it aims to facilitate easier market access to FinTech firms and other non-bank payment providers while ensuring that customers' funds are safe.
It added that the scope of the new regulation includes licensing, supervision and enforcement provisions applicable to the companies, which are licensed to provide SVF.
The central bank first introduced a regulatory framework for Stored Values and Electronic Payment Systems three years ago.
The scope of the new law covers licensing, supervision and enforcement provisions. Firms that are already licensed in the UAE to provide SVFs will be given a year to comply with the new rules, the regulator said.
"The new regulation constitutes an important milestone in the continued development of a robust regulatory framework for stored value facilities and the digital payments industry as a whole," Abdulhamid Alahmadi, governor of the Central Bank of the UAE, said.
"This regulation will ensure a level playing field for market participants and will help maintain the UAE’s status as an international financial centre and a leading payment hub.”
Consumers in the UAE are increasingly opting for digital payments – a trend accelerated by the Covid-19 pandemic, Standard Chartered revealed in a survey issued in September.
The lender found that almost two-thirds of people in the UAE, or 64 per cent, expect the country to become fully cashless by 2030.
The survey, which was conducted globally among 12,000 respondents aged 18 and above in August, showed that UAE respondents increasingly prefer making online payments over using in-person card or cash payments.
As digital payments gain pace, the UAE mobile wallet market is expected to grow at a compound annual rate of 24 per cent and reach $2.3 billion by 2022, according to a report by US-based TechSci Research.