Out-Law News 1 min. read
22 Dec 2022, 10:17 am
The Central Bank of the United Arab Emirates (CBUAE) is set to launch an instant payment platform (IPP) in the first quarter of 2023, the latest development to transform the financial services ecosystem in the UAE.
The new platform will be implemented in a phased manner and is expected to be rolled out in the first quarter of 2023 with a pilot group of licensed financial organisations. The proposed platform will provide the UAE’s financial institutions and consumers with advanced payment services, enabling payments processing and funds transfers in the UAE both around the clock and in real time.
The payments ecosystem in the UAE has undergone a major regulatory transformation over the last few years,” said financial services expert Barkha Doshi of Pinsent Masons. “The much-awaited regulations for operating an IPP platform will allow instant transfers between bank accounts 24 hours a day, 365 days a year, with participation mandatory for all financial institutions in the country. We believe that CBUAE’s IPP Platform will lay the groundwork for transforming the financial services ecosystem in the UAE.
We believe that CBUAE’s IPP Platform will lay the groundwork for transforming the financial services ecosystem in the UAE
The volume of cashless and real-time transactions has been soaring in the Emirates, due to the increased use of mobile devices and ecommerce. According to a report on real-time payments by ACI Worldwide, about 28 million real-time transactions were made in the UAE in 2021, and the figure is predicted to grow significantly to 134 million by 2026.
Surging demand and changing customer needs have driven the UAE to speed up its financial sector digitalisation and roll out the IPP. Governor of the CBUAE H.E Khaled Mohamed Balama said in the statement (1page /483KB PDF) that “The CBUAE has set out to implement ambitious initiatives in financial infrastructure transformation and national payment systems in close cooperation with the financial industry officials. We encourage the financial sector to implement the innovative functionalities and transfer the benefits to the financial consumers.”
UAE will become one of a small number of the Middle Eastern markets to adopt an IPP. Saudi Arabia introduced its instant payment solution, called ‘Sarie’, to boost its financial ecosystem in April 2021, while Bahrain implemented its instant payment system in 2015.
The CBUAE also emphasised the importance of financial institutions and eligible payment services providers to ensure their readiness to adopt the IPP in accordance with the approved action plan.
Barkha Doshi said: “To help IPP enable instant transfers between all domestic bank accounts around the clock, it is expected that the Central Bank will make it mandatory for all banks to implement the mechanism. This will help enhance the overall level of compliance with transactions and provide the regulators with a broader overview of payments being processed through the IPP.”
12 Oct 2021