Licensing gaps shape cross-border fintech expansion across the Gulf and Egypt

When an Egyptian buy-now-pay-later company decides to expand to the Gulf, it usually arrives convinced the hard part is behind it, and the cross-border expansion will help boost business (and bring in FX). The market is bigger, the customers are richer, the region shares a language and a religion, and its experience back home proves the business works. Then it meets the regulator.

“What companies typically do not realize is the multiplicity of jurisdictions and the fact that their FRA license carries no portability whatsoever,” Mohammed Essam Sid-Ahmad, partner and head of corporate and M&A at Matouk Bassiouny UAE, tells EnterpriseAM. “They are starting from zero.”

The region is routinely sold as a single, surging market, with the “big three” of Saudi Arabia, the UAE, and Egypt producing household names like Tabby, Tamara, Fawry and Halan. What that framing obscures is that MENA is not one market at all. It is a set of walled gardens. There is no passport, no mutual recognition, and no shortcut. Every border a fintech crosses, it crosses from scratch.

Three regulators who don’t recognize each other

The wall is regulatory before it is anything else. Egypt licenses non-bank consumer finance through the Financial Regulatory Authority (FRA); Saudi Arabia through its central bank, SAMA; the UAE through the Central Bank of the UAE (CBUAE), plus separate freezone regulators in the DIFC and ADGM. None of them carries over the licensing granted by the others.

“There is no mutual recognition agreement, no passporting regime, and no bilateral arrangement,” Essam says. A track record with a well-regarded regulator earns goodwill in the next application — “regulatory comfort, not legal recognition,” as he puts it — but it does not reduce the substantive requirements or speed up the process. A Gulf company entering Egypt must incorporate a fresh Egyptian joint-stock company and apply for an FRA licence on its own merits. An Egyptian company entering the UAE faces the CBUAE’s Finance Companies Regulation, where the fintech-friendly Restricted License route alone demands the higher of AED 20 mn (USD 5.45 mn) in capital or 5% of outstanding lending — against roughly EGP 75 mn (USD 1.49 mn) under the FRA. Same region, same activity, a fresh application every time.

The hidden fault line

The deeper divide is the degree to which Shariah factors into fintech regulations. In two of the “big three” countries, Shariah compliance is not a requirement. The third operates entirely on Shariah.

Egypt runs almost entirely on conventional rails. Of roughly 50 consumer finance companies in the market, only three or four offer Shariah-compliant products, Amr Sultan, co-founder and CEO of Egyptian lender Blnk tells us — and the market has grown fast anyway. Part of the reason, Sultan says, is a fatwa from Al Azhar holding that consumer finance is by its nature a Shariah-compliant activity. “Most of the customers view conventional banking products as Islamic,” he says. “Accordingly, there’s no significant demand for Shariah-compliant products.” In Egypt, the Shariah label is a feature almost nobody asks for.

Saudi Arabia is the opposite. There, Shariah compliance is effectively mandatory — digital consumer finance products carry a Shariah-compliant stamp from the central bank as a matter of law. That asymmetry is what turns a marketing question in Cairo into a structural obstacle at the proverbial border. An Egyptian fintech built on conventional products — interest, conventional late fees — cannot simply carry them into the Kingdom.

How big an obstacle this all is depends on the product. Sultan, whose company is not currently prioritizing Gulf expansion, frames a hypothetical entry into Saudi as manageable: “Some product features will likely be changed, but I wouldn’t consider it a rebuild.” Essam, who has to build the machinery, describes a heavier lift for any firm that has never operated under Sharia governance. “You cannot design a product conventionally and then ‘convert’ it at the end,” he says. Interest and penalty charges have to be eliminated; the CBUAE requires an internal Shariah supervisory committee, a Shariah compliance function and an internal Shariah audit, all approved by the Higher Shariah Authority. His estimate to stand all of that up from zero is nine to 18 months, on top of the licensing itself — a combined path that can run past two years.

Pure BNPL may be the exception. Sultan draws a sharp line between true “pay-in-four” BNPL — zero interest, zero fees, the provider paid by merchant rebates — and longer-tenor consumer finance that carries interest. Pay-in-four “invites itself to the Shariah-compliant kind of setup,” he says, because there is nothing to purify. The products that struggle to crack into Saudi Arabia are the interest-bearing ones.

The asymmetry — and the door that just closed

It is materially cheaper for a Gulf fintech to move into Egypt than for an Egyptian fintech to move into the Gulf. Cairo’s cost base — capital, salaries, office space, advisory fees — is a fraction of Dubai’s, and a Gulf entrant holding hard-currency capital converts favorably into EGP. Crucially, a Gulf firm doesn’t need to build Shariah infrastructure for Egypt, because the FRA doesn’t require it unless the company markets the Islamic label. The traffic, on cost logic, should run south.

Except the door south just slammed shut. The FRA has been intermittently suspending new microfinance and consumer finance licenses, and recently introduced new requirements for all consumer finance loans. The license suspension applies regardless of the entity’s origin. Applications already in progress are still moving through, Essam says, but a fresh applicant — a Tabby or a Tamara eyeing Egypt today — “will not be able to submit fresh applications without explicit approval from the FRA, which is not easy to obtain.” The one direction that made economic sense is, for now, administratively closed.

So what does the boom actually mean?

None of this means regional fintech isn’t growing at breakneck speed in each market. But the tidy story of a borderless regional boom is one that the regulators aren’t on board with — at least not yet. The expansion that is happening is slower, costlier and more one-directional than the headline numbers suggest, and the single biggest variable is whether a company can get through a licensing door that, in the region’s largest consumer market, is currently bolted.