Payment Services Providers License in the UAE


In the UAE, PSPs, or Payment Services Providers, are regulated by the Central Bank (CBUAE).

In July 2021, a new regulation overseeing these providers came into force, the Retail Payment Services and Card Schemes (RPSCS) Regulation. This regulation sets out the rules and conditions established by the Central Bank for acquiring and maintaining a license for the provision of retail payment services, as well as operating a payment network for cards (also known as a card scheme).

9 licensing categories of digital payment services in the UAE are covered by the RPSCS Regulation:  

  • Payment account issuance services;
  • Payment instrument issuance services;
  • Merchant acquiring services;
  • Payment aggregation services;
  • Domestic fund transfer services;
  • Cross-border fund transfer services;
  • Payment token services;
  • Payment initiation services;
  • Payment account information services.

In order to apply for a license under this regulation, a well-planned organizational business plan must be prepared and submitted to the regulator for inspection. Additionally, a resilient, secure technological platform for the operations should be in place and the background of the shareholders, directors and other personnel related to the operations must be relevant and dignified.

Furthermore, a local UAE office as well as a resident director and compliance officer are required. Obtaining a residence visa in the UAE is rather easy and only requires the applicant to be physically present in the UAE several days each year (or more precisely, one is required to enter the UAE at least once every 183 days with no minimum time requirement of presence in the UAE). 

The regulation does not oversee the regulation of stored value facilities (also known as SVFs), commodity or security tokens, virtual asset tokens, remittances or currency exchange operations. Additionally, the following are also not affected by the RPSCS regulation: payment transactions carried out between payment service providers and settlement agents, central counterparties, clearing houses and central banks, or payment transactions and related services between a parent undertaking and its subsidiary or between subsidiaries of the same parent undertaking as long as no intermediary is involved in these payment transactions, as well as technical support operations related to digital payments.

RPSCS License Categories 

Multiple overlaps exist in the services listed under the various licensing categories in question. Each category of the 4 will allow a Payment Services provider to provide a prescribed number of the 9 retail payment services, with the lower categories of payments licenses permitting more regulated activities.

Each type has its own initial capital requirement, as set out by the regulation. The minimum levels are set according the the average of the monthly value of the payment transactions, except for payment initiation services and payment account information services, that require an initial capital requirement of at least 100,000 AED, regardless of what the average value of the monthly transactions is.

It’s also worth noting that the CBUAE expressly reserves their right to impose higher aggregate capital funds requirements if deemed necessary to ensure that the PSP in question will be able to meet its regulatory obligations. 

Furthermore, once a PSP’s value of payment transactions exceed 10 million AED for 3 consecutive amounts, the PSP will automatically be subject to a higher aggregate capital fund requirement. The amended, higher amount will be determined by the CBUAE.

Regulation for payment token services

The regulation also includes a definition of payment token services:

  • Payment token issuing; 
  • Payment token buying; 
  • Payment token selling; 
  • Facilitating the exchange of payment tokens; 
  • Enabling payments to merchants or enabling peer-to-peer payments; 
  • Custodian services. 

It is important to note, however, that a PSP may only provide 1 of the latter 2 services (enabling payments to merchants or peer-to-per payments OR custodian services). If the PSP wants to provide both of these two, as well as allows retail payment service user to redeem the payment tokens in question with any fiat currency (naturally under a contractual arrangement for the aforementioned), it must be compliant with the SVF requirements in question.

These provisions are noteworthy and important as they serve as clarification for the treatment  of cryptographic payment tokens, when used as a part of a  retail payment service. The provision also enables both the establishment and operation of an over-the-counter payment token desk.

PSPs issuing a payment token will be required to draft and circulate a white paper about the token, where information about the main participants that are involved in the project’s design and development is included, as well as a detailed description of the project and the token itself, the number of payment tokens that the PSP will be issuing, the issue price for the token, and other relevant details.

The Porat Group team encourages anyone interested in this licensing process and ancillary services related to it to reach out to us.