UAE announces new buy-now-pay-later rules
The UAE has introduced updated regulations governing firms that provide buy-now-pay-later and similar credit services within the country.
Recognizing the evolving global trends in consumer finance and the growing popularity of "buy-now, pay-later" credit products, the Central Bank of the UAE has unveiled amendments to the Finance Companies Regulation.
Buy-now-pay-later
The newly established framework permits entities to offer short-term credit services, provided they operate as agents of licensed banks or finance companies, subject to approval from the Central Bank. Additionally, organizations seeking to engage in such activities can obtain licenses as Restricted Licence Finance Companies after obtaining Central Bank approval.
Entities lacking proper licenses that are currently involved in any form of short-term credit activities and wish to continue must choose between applying to the Central Bank for licensing as Restricted Licence Finance Companies or establishing partnerships with licensed Finance Companies or Banks. This regulatory update aims to ensure a structured and compliant approach to the provision of buy-now-pay-later services in the UAE's financial landscape.
Regulation Update:
Due to the increasing demand for buy-now-pay-later and similar credit services, the Finance Companies Regulation has been amended by the Central Bank of the UAE.
Short-Term Credit Provision:
Entities can provide short-term credit services under the new framework, either as agents of licensed banks or finance companies, with Central Bank approval.
Restricted Licence Finance Companies:
Entities can obtain licenses as Restricted Licence Finance Companies to engage in short-term credit activities, subject to Central Bank approval.
Unlicensed Entities:
Entities lacking proper licenses that are currently involved in short-term credit activities must either apply for a Restricted Licence or form partnerships with licensed Finance Companies or Banks.
These regulatory changes reflect the UAE's commitment to adapting to evolving consumer financial trends while ensuring the integrity and oversight of credit services in the country. The amendments provide a clear framework for entities involved in the buy-now-pay-later sector, promoting responsible financial practices and compliance with established standards.
