In a significant move to formalize and grow its fintech sector, the Central Bank of Oman has officially issued regulations governing “Buy Now, Pay Later” (BNPL) schemes. The decision, announced by Governor Ahmed bin Jaafar al Musalmi, aims to bring structure to the rapidly expanding instalment financing market, promoting financial stability and enhancing consumer protection within the Sultanate.
A Framework for Stability and Growth
The new regulations are designed to curb unregulated practices in short-term consumer finance, providing a stable foundation for the BNPL market to grow. By introducing clear rules and capital requirements, the framework aims to reduce the risk of sudden bankruptcies and protect customer rights, aligning Oman with a global BNPL market projected to reach nearly $83.36 billion by 2034.
The CBO’s initiative also includes provisions to encourage financial inclusion, authorizing the Governor to grant exceptions to licensing conditions for business models that serve the unbanked or focus on remote and underserved areas.
Licensing and Operational Mandates
Under the new rules, any entity wishing to offer BNPL services must obtain a license from the Central Bank. Applicants must be an Omani company, though foreign shareholding is permitted, and are required to submit a comprehensive economic feasibility study. This includes a five-year financial projection, a detailed business plan, and proof of arrangements with licensed banks or payment service providers.
Once a license is granted, the company must commence operations within six months. Furthermore, establishing new branches will require prior approval from the Central Bank, ensuring controlled and sustainable expansion.
Protecting the Consumer
A core focus of the regulations is safeguarding consumers. Licensees are obligated to verify a client’s financial solvency and credit history to ensure their ability to meet repayment obligations. All transactions must be clearly documented, and providers must guarantee fair and transparent dealings with their customers.
The framework also mandates the establishment of mechanisms for handling customer complaints promptly. Key prohibitions include offering services to individuals under 18, serving clients outside Oman, and conducting transactions in currencies other than the Rial Omani.
Financial Requirements and Prohibitions
To ensure market integrity, the regulations stipulate strict financial guardrails. BNPL providers are required to maintain a financial guarantee of RO 10,000 or 2% of their paid-up capital, whichever is higher, capped at a maximum of RO 100,000.
Additionally, licensees are prohibited from allowing their total financing to exceed ten times their paid-up capital. The rules also forbid engaging in any unlicensed business activities, introducing new products without CBO authorization, or using false or misleading advertising.
About The Central Bank of Oman
The Central Bank of Oman (CBO) is the principal banking and monetary authority in the Sultanate of Oman. Established in 1974, the CBO is responsible for maintaining the stability of the national currency, the Omani Rial, and ensuring the stability and soundness of the nation’s financial system through prudent monetary policy and effective banking regulation.
Source: Zawya
