In just two days after its launch, the Qatar Central Bank (QCB) has received as many as 25 applications from fintech companies to offer 'Buy Now Pay Later' (BNPL) services, indicating the growing prominence of digitalisation in the country's growing e-commerce space.
"In just two days, since the launch of BNPL QCB campaign, the fintech licensing and registration platform has received more than 25 requests to apply for the service," the central bank said in a post in its social media platform X.
The applications will be accepted until November 3, 2023.
The QCB issued the BNPL regulations, following the launch of its fintech strategy earlier this year, stipulating that on an ongoing basis, a minimum capital of QR5mn should be maintained by the BNPL provider as initial paid-up capital or 15% of the outstanding loans, whichever is higher.
The BNPL provider should calculate the outstanding loan amount as per the average daily balance for the last 90 days. The maximum credit amount at any point in time should not exceed QR25,000 for each customer from all BNPL providers.
While BNPL products and services are currently being offered in Qatar, albeit on a limited scale, through licensed financial institutions in Qatar, the BNPL regulations seek to regulate the provision of BNPL products and services via separately licensed BNPL service providers.
BNPL represents a quantum leap in the field of e-commerce in the country, and creates a favourable environment to explore digital opportunities and services in this field, while adhering to the regulatory standards set by QCB, the central bank said.
According to Al Tamimi and Co, a leading law firm in the Middle East and North Africa (Mena), BNPL is gaining traction throughout the Mena region.
BNPL is essentially a short term (no more than 12 months) interest free credit facility that allows a customer to split its transaction amount into instalment payments to allow repayment over a period of time to the BNPL service provider
Under the BNPL regulations, a BNPL provider is lender that undertakes the credit risk of a BNPL product or service but cannot provide or lend cash to the customers.
The BNPL product or service is provided to an individual customer resident in Qatar (age 18 or above) for the purchase of products or services from Qatar or non-Qatar based merchants. The BNPL Provider undertakes the complete credit risk of the provided facility. It is an unsecured lending product.
The BNPL regulations has applicability throughout Qatar and applies to any BNPL provider set up under the Ministry of Commerce and Industry (MoCI), the Qatar Financial Centre (QFC), the Qatar Science and Technology Park (QSTP), or any other free zone authority or commercial licensing entity.
The BNPL regulations take into consideration the offering of both conventional and Shariah compliant BNPL products and services.
For Shariah-compliant structures, the BNPL provider must appoint a Shariah adviser (subject to QCB approval) to advice on the relevant structures and characteristics of Shariah-compliant BNPL products and service offering.
