The Central Bank of the UAE (CBUAE) has introduced two new regulations for the payment system. CBUAE has defined two modes of payment – The Large Value Payments System (LVPS) and Retail Payment System (RPS) for which new regulations are introduced accordingly.
Both of the regulations are being applied to both form of payment system that is under operation within UAE and payment systems which are offering clearing or settlement in Dirham outside the UAE as well. It has been believed that these two regulations will promote financial infrastructure which is indeed essential for financial stability along with consumer protection. They are believed to promote financial stability and consumer protection facilitating UAE’s international competitiveness.
While LVPS determines standards for financial infrastructure supporting wholesale payment activities within the UAE, RPS focuses on the system for retail payment providing basic retail functions like clearing, fund transfer, and settlement services that are related to retail activities. This set of regulations covers all retail payment systems irrespective of the currency means.
It has further been said in the circular issued by Central Bank that the system operators along with settlement institutions of existing LVPS and RPS operating in the UAE should compulsorily comply with requirements of these regulations by the end of the transitional period which expires at the end of February of 2022.
Governor of the Central Bank of the UAE, His Excellency Abdulhamid M. Saeed Alahmadi stated that payment systems are assents of the financial system, which is a critical portion of any nation’s financial infrastructure. These two regulations are an important milestone to reach the objective of providing efficient, robust, and accessible financial infrastructure in the UAE serving the financial needs of the nation. These regulations were published in Official Gazette on 31 January 2021 and they are now in effect too.
It is believed that these regulations will also contribute to facilitating the UAE’s international competitiveness. Governor Alahmadi further said that these regulations will facilitate a smooth, efficient, and secured way to conduct any sort of banking transactions. UAE’s banking industry is gradually getting transformed. Recently Central Bank gave permission to Dubai-based Company YAP for digital banking transactions.