Key takeaways

• The PSP Regulations apply to any individual or company operating payment systems (PSOs), offering one or more payment services (PSPs), or seeking to carry out either activity whether from inside Egypt ("Local Entities") or from abroad to residents in Egypt ("Foreign Entities").
• The PSP Regulations include transitional provisions which require all Local Entities and Foreign Entities currently operating in the Egyptian market, to apply for a license with the CBE within twelve (12) months from the date of issuance of the PSP Regulations. Said transitional provisions do not apply to licensed banks.
• The PSP Regulations streamlined the definitions for payment systems and payment services with the Banking Law No. 194 of 2020 whereby:
  • Payment services are defined as all services associated with account information or with issuing, sending, receiving or executing payment orders and operations, whether in local or foreign currency, including the issuance and management of payment instruments and electronic money ("Payment Services").
  • Payment systems are defined as a set of means and procedures for paying, clearing or settling money by transferring funds between two or more parties through an electronic system ("Payment Systems").
• The PSP Regulations set the conditions to be satisfied by Local Entities applying for a PSP or PSO license including the legal form of the company, capital requirements, shareholding and governance structures, and technical requirements. The PSP Regulations also set out the list of supporting documents required to be submitted.
• Likewise, the PSP Regulations set out different conditions for Foreign Entities applying for a PSP or PSO license, most material of which are the following:
  • A foreign PSO must be licensed by an equivalent regulatory authority which applies the Principles of Financial Market Infrastructures (PFMI) issued by the Bank of International Settlements.
  • Any Foreign Entity must have a track record of operating Payment Systems or offering Payment Services in one or more countries other than the Arab Republic of Egypt for three consecutive years.
• Local Entities applying for PSP or PSO licenses must provide financial collateral in the form of an irrevocable and unconditional letter of guarantee in favour of the CBE issued by a licensed Egyptian bank which renews automatically. Such collateral shall be in an amount equivalent to 2% of the value of the relevant entity's issued and paid-up capital. In relation to Foreign Entities, the CBE shall determine the value of the collateral.

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