How do you Get a Payment Service Provider License in Dubai?

Have you been trying to get a Payment Service Provider license but didn’t know where to start? Here are some details we can help you with. An online payment service provider provides e-commerce services by using online payment methods such as direct debit, credit cards, and online bank transfers to offer online shopping services.

This service provider serves as a middleman between the bank and the consumers. It’s a way to make payments online through multiple channels such as the phone and online store.

People are increasingly shopping and paying online due to the growing popularity of E-Commerce across the globe. PSPs are incredibly important in Dubai, a city with a big international community thanks to the fact that it supports multiple payment methods and multiple currencies; that’s why PSPs are so important.

In What Ways do Payment Service Providers Work?

Banks and payment processors are tied together by the Payment Service Provider. Through the payment gateway that is issued from the respective bank for payment processing, they are able to accept e-payments from merchants online. While processing the transaction through the payment gateway, the details of the transaction are displayed.

Various steps are being taken by companies that provide payment services to proliferate the ways of making payments, especially through using mobile devices. Increasingly, people are using plastic money to make payments easier and more conveniently than carrying physical cash notes in wallets or checkbooks.

UAE Payment Service Provider License Options 

In the United Arab Emirates, licenses are issued for Payment Service Providers under a new electronic payment regulation. Licensed payment service providers can be classified into four categories under the Regulation.

  1. A retail payment service provider is one that provides peer-to-peer, retail, and digital government payments, such as banks and other kinds of payment service providers.
  2. Providers who handle micro-payments to unbanked and underbanked markets constitute the second category.
  3. Government entities that accept digital payments make up the third group.
  4. Last but not least, there are non-issuing service providers, such as non-depositing and non-issuing institutions.

Requirements for Applicants of PSP License

  • An applicant must demonstrate that they fit within one of the above-mentioned categories in order to apply.
  • In addition, applicants must reside in Dubai or in one of the free zones.
  • Applicants must also demonstrate they have the experience and personnel needed to deal with digital payment services.
  • Furthermore, the applicants must demonstrate that effective internal policies exist, as well as fulfilling the required minimum capital.

How do Payment Service Providers work with Banks?

Payment service providers collaborate with acquiring banks to manage the transaction from beginning to end. Here’s a breakdown of how the transaction process works in greater detail:

  • First, the consumer initiates a payment, and the acquiring bank receives the transaction information.
  • The data is subsequently transferred to the credit card network, which ultimately sends the transaction information to the issuing bank.
  • Following its decision on whether or not to authorize the transaction, the issuing bank informs the credit card network, which then informs the acquiring bank.
  • The decision is then forwarded to the payment service provider, who informs the consumer and merchant of the outcome.
  • The issuing bank will transfer the money to the credit card network, which will then transmit them to the acquiring bank, where they will be placed in the PSP’s merchant account.

Licensing Costs

In Dubai, here is the information about getting the license you need if you plan to set up a PSP business:

  • Reservations for trade names cost
  • Initial Approval cost
  • Court Fee
  • Final Submission cost
  • Market Fee: 2.5% of Annual Rent
  • License Fees Approx. 7,870.00

You must have an office in order to get this license. It is not available for shared offices or desks. The license will need to be approved by the Central Bank, but it will also need a deposit. They can only confirm this once the business plan has been approved once has been filed.

There will be extra costs for the Central Bank’s approval.

What are the services provided by a payment service provider?

Payment service providers allow companies to accept card and bank-based payments can provide a variety of other services that can improve the payment experience for both customers and merchants. So, besides processing transactions, what do payment service providers do?

  • For PSP payments, several payment service providers provide high levels of security. Businesses may be confident that their customers’ financial data is secure by adhering to the PCI DSS.
  • Many PSPs also make cross-border payments easier by handling various currencies. This is an essential service for any company seeking to break into the worldwide market.
  • Many payment service providers will also provide transaction reporting services, allowing you to reconcile transactions more efficiently. In most cases, these will be monthly reports; however, some providers may give real-time information.

Key Requirements To Apply License: For A Card Scheme & payment token service

In addition to the rules that apply to all payment providers, those who provide payment token services will be subject to additional requirements. Such as the need to assess cybersecurity risk on a regular basis, conduct penetration and cyberattack simulation tests.

And keep a reserve of fiat will now have the power to receive information on and regulate the fees levied by card scheme operators, including the ability to make such costs public. As is frequently the case, we may anticipate a convergence of costs and across the various card systems as a result of this increased degree of openness.

Activities that are not Regulated

Entities that provide the following payment services are exempt from regulation:

  • Payments are made in cash without the need of a middleman.
  • Using a credit or debit card to make a purchase.
  • Payments are made with paper checks.
  • The closed-loop payment instruments, such as loyalty cards or rewards programs that a department store gives to a user to spend only in that department stor.
  • Payment instruments are accepted as a form of payment exclusively to purchase goods or services offered by an issuer.
  • Payments between settlement institutions, clearinghouses, central banks, and payment service providers in a payment/settlement system.
  • Payments for the transfer of securities and assets.
  • For their own accounts, PSPs conduct payment transactions.
  • Entities that provide support services to PSPs but do not handle user funds, such as transaction data processing and storage, privacy protection services, data, and entity authentication, IT network provision, and provision and maintenance of payment terminals and devices.

Advantages of Using a Third-party Payment Processor?

PSPs and PSP payments offer a variety of advantages. Most significantly, they handle the whole payment process for you, allowing you to concentrate on your main business rather than worrying about getting paid.

Payments to PSPs can also be made using a variety of methods, including credit cards and direct debit. You can guarantee that you don’t turn away any potential clients by accepting as many payment options as possible, therefore increasing your sales.

Capital Needs at the Start

A licensee must fulfill rigorous financial resourcing criteria as a condition of acquiring and maintaining its Payments License, similar to the SVF Regulation. These starting capital requirements vary by Payments License category, ranging from AED 100,000 to AED 3,000,000 for a Category IV Payments License to AED 3,000,000 for a Category I Payments License. The combined capital funds of the PSP may not fall below the required starting capital.

Although the initial capital requirements for the various Payments Licenses are significantly lower than those required to maintain an SVF License, the CBUAE expressly reserves the right to impose higher aggregate capital fund requirements if the CBUAE believes it is necessary to ensure that the PSP can meet its regulatory obligations.

In addition, once the value of payment transactions exceeds AED 10 million for three consecutive months, a PSP will be subject to a higher aggregate capital fund requirement. The CBUAE will decide how much this new sum will be.

DBS at Your Service

Our team at Dubai Business Service has experienced experts that will guide you through the whole process of applying for a UAE PSP License, including document preparation, application filing, and answering any Central Bank questions. We strongly advise you to contact one of our advisors as soon as possible to fully comprehend the procedure and apply for a UAE PSP License.

Please get in touch with us; we’d be delighted to help.

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Contact Us

You can contact us to know more about how we can support the development of your business ideas by obtaining a Payment Service Provider License in Dubai. We will handle all the legal documentation on your behalf.

Talk to our expert business consultants today to learn more about starting a business in Dubai and UAE!

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