How to Obtain a Payment Service Provider License in UAE

Looking to get a PSP license in the UAE? Congratulations! You’re on the right track to the world of digital payments. A PSP license allows businesses and consumers online payments, digital wallets, and other payment solutions. The UAE has a transparent and supportive system for businesses in the fintech industry. This makes it is an exciting place to start.

Understand this process quickly by knowing about obtaining a PSP license in the UAE. We’ll explain the basic requirements till the application process. The guide will cover details such as:

• What is a payment service provider?
• How does it function?
• Procedure to obtain a PSP license
• PSP license UAE requirements
• Get your PSP license in the UAE with CBC

What is a Payment Service Provider UAE?

A Payment Service Provider is a company or financial institution. A PSP facilitates online business payment processing. It helps to accept customer payments through various methods. PSPs provide the technology and infrastructure to handle payment transactions, such as:

• Credit/debit cards
• E-wallets
• Bank transfers, and
• Other payment methods.

How does it Function?

A Payment Service Provider acts as an intermediary between merchants, customers, and financial institutions. Breaking down in detail of how a PSP operates:

Process 1→Transaction Initiation

The process begins when a customer purchases goods or services from an online merchant. They select their preferred payment method. It can be a credit card, e-wallet, etc. Additionally, the merchant has integrated the payment gateway into their website/app to handle the transaction securely.

Process 2→Authorization of Payment

Next, the customer enters payment details on the merchant’s website. The data is encrypted and sent to the PSP’s payment gateway. The PSP forwards the payment information to the merchant’s bank for further processing.

Process 3→Processing of Payment

The merchant’s bank sends the payment details to the card network/bank’s payment processor. The card network forwards the request to the issuing bank. They will confirm that the funds are available and that the transaction is legitimate.

Process 4→Transaction Approval/Decline

The issuing bank checks if the customer’s account has sufficient funds. After confirmation, they send back an authorization or decline message. The decision is sent back through the card network to the PSP. The result is sent to the merchant’s system. It can be approved or denied

Process 5→Transaction Completion

On approval, the transaction is completed. The funds are temporarily held in the merchant’s account. The customer receives confirmation in the form of an order receipt from the merchant.

Process 6→Transfering Fund

The PSP facilitates the transfer of funds from the customer’s bank to the merchant’s bank after authorization. It depends on the payment method. The transaction is considered complete once when the funds are transferred. PSPs offer reporting tools for merchants to track these transactions.

Steps to Obtain a UAE PSP License

 Businesses must go through a regulatory process to obtain a PSP license in the UAE. The regulations are set by the UAE government to offer payment services legally. We are going to uncover the step-by-step guide on how to obtain a PSP license in the UAE:

Regulatory Framework

The UAE Central Bank is the primary authority. The Central Bank regulates PSPs in the country. Businesses must comply with the regulations set by the Central Bank. It is essential to operate legally as a payment service provider in the UAE.

Eligibility Criteria

The applicant company must meet specific eligibility requirements. They must be a registered legal entity in the UAE. Typically, in Dubai or another emirate. The company should have adequate infrastructure to offer payment services. Further, they meet capital requirements as set by the Central Bank.

Business Setup Selection

Decide between free zone, mainland, or offshore to set up your business. As this can impact the licensing process. Dubai business setup allows you to obtain a PSP license in Dubai. Enabling you to operate within the city and across the UAE. On the other hand, several free zones in the UAE also offer payment service provider licenses. But the restrictions vary by zone.

Documents Preparation

Beforehand, prepare the required documents. It typically include the following:

—> A Business plan

—> AML and KYC compliance proof.

—> Company formation documents

—> Identification documents for all shareholders and directors.

Application Submission

Apply for a PSP license to the Central Bank. Submit it with the required documentation. The application will be reviewed for compliance with UAE laws and financial regulations.

Obtain Approval

Upon submission, the Central Bank will review your application. You’ll be granted the PSP license in the UAE once approved. Allowing you to offer payment services legally within the country.

Regulations Compliance

Comply with the UAE’s regulatory requirements once you are licensed, including:

• Regular audits
• Reporting, and
• Maintaining AML and KYC standards.

Start Operations

Lastly, begin offering your payment solutions to clients on obtaining your PSP license in Dubai or in the UAE.

PSP License UAE Requirements

The following requirements must be met to obtain a PSP license in Dubai,:

• A UAE-based company/branch in a Free Zone or DIFC.
• Submit a business plan, demonstrating financial stability
• Pass a fit-and-proper test for key personnel.
• Capital requirements range from AED 1 – AED 5 million.
• Strong AML, KYC, and data protection measures.
• Secure payment systems and data protection in place.
• Regular audits and financial reporting.
• Compliance with Central Bank of the UAE or DFSA regulations.

PSP License UAE Cost

The payment service provider license cost involves an application fee and license fees. Typically, prices start from around USD 15,000. It includes the initial application process and the associated licensing fees for businesses.

Note that, the PSP license fees may vary. However, it may depend on specific requirements. These are the business nature, and the free zone or regulatory authority involved. Contact Connect Business Center if you want to know the exact cost.

Hire Connect Business Center: Get your Payment Service Provider License UAE

For digital payment services businesses, obtaining a payment service Provider license in UAE is a must-have. Those firms who get it can operate in a safe, regulated environment that builds customer trust. We have shared the steps to meet local regulations while getting your PSP license in the UAE.

Still, find it hard to obtain your PSP license? Have expert assistance at Connect Business Center. Our professionals know how and what it needs to obtain a payment service provider license hassle-free. The years of solutions, and delivered to various clients across UAE make us valuable and reliable in the eyes of our clients. We follow closely local regulations while obtaining your PSP license. Get started with us today by obtaining your license in a go!