Buy Now Pay Later service's regulatory framework under development: Central Bank of Oman

PHOTO

MUSCAT: The Central Bank of Oman (CBO) is currently in the process of developing a licensing and regulatory framework to support the introduction of Buy Now Pay Later (BNPL) services – a short-term financing that allows consumers to make purchases and pay for them at a future date.

According to its recently published 12th Financial Stability Report (FSR) for 2024, the Central Bank has already approved a set of new regulations governing the business of Buy Now Pay Later services, and is currently in the process of seeking public consultation for developing the licensing and regulatory framework for financial technology entities with the aim of “extending microfinance to individuals with limited access to traditional banking services”.

The initiative is amongst many initiatives planned by CBO with the aim of supporting and developing the fintech sector in Oman, which has been identified as one of the main pillars under the National Programme for Digital Economy.

According to the report, other initiatives include the upcoming release of a regulatory framework for Digital Banks in 2024, following the establishment of frameworks for Digital Onboarding, Cybersecurity, and Cloud services.

In addition, the CBO began working on the implementation of an Anti-Money Laundering regulatory technology tool, known as STRIX, last year in an effort to improve supervision efficiency and effectiveness and to enhance compliance processes and regulatory oversight.

Additionally, the bank is also in the process of finalising the Open Banking framework, which will allow banks to collaborate with third-party payment service and financial service providers for an enhanced consumer experience.

Lastly, the report shared that the bank will develop a framework based on “Alternate Modes of Finance,” based on the results on a current sandbox cohort addressing the same topic, under its Fintech Regulatory Sandbox system In 2022, the annual revenues of the fintech industry in the Mena region reached $ 1.4 billion, and is expected to grow to $3.5 - 4.5 billion by 2025, according to Eng Ibrahim bin Abdullah al Hosni, Chairman of the Digital Economy and Artificial Intelligence Committee at Oman Chamber of Commerce and Industry. The value of digital assets in Oman is expected to reach $51.47 million in 2024.