MUSCAT: Draft regulations to support the introduction of ‘Buy Now Pay Later’ (BNPL) services – short-term credit to enable online and offline purchases of all kinds of consumer goods and services – have been published by the Central Bank of Oman (CBO).
In a post, the Central Bank said the publication of the Draft Guidelines on the Licensing & Regulatory Framework for ‘Buy Now, Pay Later’ is aimed at eliciting public feedback on the provisions of the new initiative, before it can be fine-tuned and finally approved.
When eventually enacted, the ‘Buy Now, Pay Later’ initiative has the potential to spur consumer spending and impart a much-needed boost to the consumer retail sector in the country.
The apex bank describes Buy Now Pay Later as a “short-term financing facility availed by customers to purchase goods or services and defer the payment for a later date, often in monthly instalments”.
The concept of BNPL services, while having existed for years under conventional banking systems, has burgeoned in the wake of the growth of fintech, offering consumers unmatched ease-of-use when shopping online or offline.
A robust regulatory framework, the Central Bank noted, is key to fostering the growth of BNPL services “in a safe and sound manner aimed at ensuring fair and transparent practices that protect customers from over indebtedness and unfair lending practices”.
Companies seeking a license to operate BNPL services must have a minimum capital of RO 250,000 and have a physical presence within Oman, according to licensing criteria stipulated by the Central Bank.
Licensed BNPL providers can offer their services either through a merchant store (online or offline) or over the BNPL provider’s digital platform that services multiple merchants.
BNPL services can be offered either at the time of checkout or as an upfront credit limit which can be used at participating merchants in return for goods or services only. Not permitted for credit under BNPL guidelines are any types of investment products, virtual assets, goods prohibited in Oman, and other products or services prohibited by the Central Bank. Additionally, cash cannot be disbursed by BNPL providers to customers. Furthermore, BNPL services can be either conventional or sharia-compliant, according the Central Bank.
Significantly, the maximum period for repayment of BNPL-linked products or services shall not exceed 12 months. All credit facilities extended by the BNPL provider shall be reported to the Oman Credit and Financial Information Centre (Mala’a).
In the Middle East, markets that have embraced Buy Now Pay Later services have typically witnessed an uptick in investment inflows from players operating in the BNPL space. BNPL schemes also open up opportunities for investment for businesses looking to monetize the receivables from BNPL products. Job creation is a significant spin-off as well.
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