The Saudi Central Bank (Sama) is out with proposed regulations (pdf) for opening electronic wallets as it looks to regulate the sector. The rules, which aim to set regulatory and supervisory requirements for electronic payment institutions, have been put up on the government’s survey platform Istitlaa for public consultation until Thursday, 30 May.

E-wallets for all: Individuals (whether local or expats) looking to open e-wallets can do so through their national IDs or residency cards. Children under 18 can also have access to their own e-wallets provided that they are opened through their parents or legal guardians. Digital wallets for underage children do not allow access for cash withdrawals or cross-border transactions, with Sama setting the maximum limit for monthly payments for these wallets. Companies, NGOs, and freelancers can also open e-wallets provided that they present required paperwork, which includes commercial registers, licenses and freelance services contracts among others.

Clients can close their digital wallets after financial service providers approve their request provided there is no order for a seizure of funds. They, along with GGC citizens, would not be required to update their data as a prerequisite to shut down their wallets. However, expats must provide a valid residency or a final exit visa to close their wallets. If a wallet remains inactive for a year — except if there were payments on hold — the financial institution will notify the customer and close the wallet after 30 days of the notification period.

Strict monitoring for financial fraud: Electronic payment institutions should have a clear understanding of clients’ activities and nature of transactions before they proceed with opening e-wallets. They should implement customer verification procedures similar to ones used with fintech clients to help combat possible fraud when using e-wallets. They would also be required to use automated surveillance systems to monitor possible internal and external fraud when using the digital wallets.

In context: The new draft regulations come amid a cashless push as Sama clears more fintech companies to provide digital payments solutions to customers. Some of the authorized e-wallet providers include STC Pay, BayanPay, Hala, Alinma Pay, URPay, and others. The local digital wallet market is forecast to grow at a CAGR of 8.8% during 2023 to 2028 on the back of more people using their smartphones to make online transactions.

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