Qatar Central Bank Issues the Payment Services Regulations

Qatar Central Bank (“QCB”) has issued Circular No. 23 of 2021 pursuant to which it has issued the Payment Services Regulations (“Payment Services Regulations”). The Payment Services Regulations came into force on 15 September 2021.

For the first time, the QCB seeks to formally regulate and supervise payment service providers (“PSPs”) who provide any payment services in or from Qatar identified as such in the Payment Services Regulations.

Scope and Exemptions

Generally, the Payment Services Regulations apply to: (i) services that have a clear payments nexus and pose systemic risk to the Qatar financial system; (ii) service providers who process funds or provide merchant acquiring services; and (iii) service providers who contract or deal with the consumer or the merchant in respect of payment services. More specifically, the following services are considered regulated payment services for which prior authorisation is required from the QCB:

• E-money issuance;
• merchant acquiring services;
• local fund transfer services; and
• other regulated payment services such as the provision of a payment portal, the provision of settlement services to PSPs and owning or operating ATMs.

PSPs providing the above general or specific payment services in or from Qatar are required to obtain a relevant license from the QCB after satisfaction of the relevant requirements set out for such license in the Payment Services Regulations.

Certain exemptions are set out in the Payment Services Regulations which either do not necessitate a license from the QCB or those services which do not constitute regulated payment services. These exemptions are as follows:

• Exempted entities – all banks licensed by the QCB in Qatar are exempt from obtaining an additional payment services licence under the Payment Services Regulations.
• Exempted services – following services are not considered payment services:
• data processing and data storage services;
• any services related to electronic security, trust or privacy protection services;
• any information technology services;
• services of providing a communication network;
• the services of providing and maintaining any terminal or device used for any payment service; and
• issuance of closed prepaid payment instruments for purchase of goods and services only from the issuer for limited purposes – note however that the issuer is required to notify the QCB of the instrument being issued and the QCB retains the right to seek further information on such instruments.

Licensing Requirements

The Payment Services Regulations also include detailed provisions relating to the licensing and operational requirements of PSPs. These include requirements about corporate governance, corporate structure and capital requirements, performance and implementation security, risk management, AML/CFT/KYC requirements, outsourcing, licensing fees etc.

Additionally, the Payment Services Regulations provide certain special conditions regarding issuing E-money and E-wallets and set out limits for transactions that can be conducted using E-money.

Why it is Important

The introduction of the Payment Services Regulations is a significant development in the banking and financial services industry in Qatar. These regulations govern and regulate areas that were previously not explicitly regulated. The Payment Services Regulations will have an impact on the business and operations of PSPs and other associated financial service providers and will require such entities to obtain a special licence and be under the umbrella of the QCB’s control and supervision.

The Payment Services Regulations are particularly relevant as FIFA World Cup 2022 is fast approaching and the relevant stakeholders, including financial institutions, are expected to have all payments and systems in place to facilitate the world-wide traffic coming to Qatar to achieve the vision of holding a cashless FIFA World Cup 2022.

How can we help?

Al Tamimi and Company has an unrivalled experience in the Middle East and North Africa region advising local and international financial and non-financial service providers that offer their diverse payment solutions in terms of setting up, licensing and compliance with local laws and regulations.

If you require further information, please feel free to contact us.