The Central Bank of Egypt (CBE) has unveiled a comprehensive set of regulations governing the licensing and registration of payment system operators and electronic payment service providers. Issued under the authority of Law No. 194 of 2020 on the Central Bank and the Banking System, the new framework aligns with the CBE’s broader commitment to adapting to rapid developments in the digital payments landscape and enhancing financial security and efficiency for users across Egypt.
Scope of Application Includes Domestic and Cross-Border Institutions
The new regulatory framework sets out the conditions and procedures for granting licences to institutions—both within and outside Egypt—that provide payment services or operate payment systems targeting clients inside Egypt. It applies to a wide range of activities, including depositing and withdrawing cash from payment accounts, executing payment transactions and money transfers, issuing payment instruments, managing electronic acceptance channels, sending and disbursing remittances in Egyptian pounds, initiating payment orders, and offering payment account information services.
The regulations clearly define the procedures for obtaining prior approval and licensing, including the required documentation, minimum capital requirements, financial guarantees, rules governing licence amendments, and applicable inspection and supervision fees.
12-Month Grace Period for Existing Operators
The CBE has granted a transitional period of 12 months from the issuance date of the new regulations for existing payment institutions to comply. During this period, institutions currently operating in the market are required to apply for a licence from the Central Bank but may continue their activities until a final decision is issued regarding their compliance, as determined by the CBE’s Board of Directors.
The regulations also address licensing procedures for foreign-based institutions offering services to clients within Egypt. These institutions must be licensed by an equivalent regulatory authority in their country of origin and must meet the criteria established by the CBE for providing services inside Egypt.
Additionally, the CBE stressed the requirement to obtain prior approval before establishing a new payment institution or amending an existing one’s commercial registry details to include payment services or system operations.
Prior Approval as a Prerequisite for Licensing
The CBE clarified that all relevant institutions must submit an application to obtain prior approval—whether to establish a new payment entity or to add payment services or system operations to the commercial registry or corporate documents of an existing company.
Once all necessary documents have been submitted, the Central Bank will issue a decision within 90 days. This period may be extended once for an additional 90 days. If prior approval is granted, the applicant then has six months to submit a full licensing application. Failure to do so within this timeframe will render the prior approval void. However, an extension may be requested up to 30 days before the approval’s expiry.
The Central Bank underlined that prior approval alone does not authorise the institution to provide payment services or operate a payment system. Full licensing is required, and the CBE reserves the right to reject the application even if prior approval has been obtained.
Applications must include the proposed or existing name of the institution in both Arabic and English, along with a certificate confirming the name does not conflict with existing entities. A business model, proof of inspection fee payment, and any additional documents or information requested by the Central Bank must also be submitted.
Capital Requirements Differ by Category
The CBE set minimum capital requirements depending on the category of service provider. For payment service providers classified as Category A, the minimum paid-up capital is set at EGP 30m. For Category B, the requirement is EGP 10m. Providers of account information services and payment initiation services must maintain a minimum capital of EGP 20m. Meanwhile, operators of payment systems are required to have a minimum paid-up capital of EGP 500m.
If a Category A provider also wishes to offer account information or payment initiation services, the institution must meet the highest applicable capital requirement. In cases where a single institution performs both payment services and payment system operations, it must meet the capital thresholds for both activities.
Mandatory Three-Year Strategic Business Plan
The CBE further requires that all applicants submit a comprehensive strategic business plan covering a minimum period of three years. This plan must include financial projections, a clear revenue model, growth and expansion plans, risk management frameworks, and details of the technological infrastructure intended for use.
Applicants must also provide evidence of financial soundness, technically qualified staff, adequate managerial expertise, and sufficient technological readiness to support their operations. These standards apply equally to both domestic and international institutions seeking to operate in Egypt, including those offering services remotely via online platforms.
Unconditional Financial Guarantee Now Required
As a new safeguard to ensure financial compliance and discipline, the Central Bank now mandates that all licensed institutions submit an unconditional financial guarantee upon obtaining a licence. This guarantee must be in the form of a final, irrevocable, and automatically renewing letter of guarantee issued by a bank registered with the CBE.
The value of the financial guarantee must equal 2% of the institution’s paid-up capital or the capital allocated specifically for its payment-related activity. This guarantee can be used to impose financial penalties for violations of laws, regulations, or CBE directives. The CBE Board of Directors is authorised to issue such penalty decisions. If the guarantee is partially or fully drawn down, the institution must replenish the amount within 15 business days.
The value of the guarantee must also be recalculated annually or whenever changes occur in capital requirements. Submission of this guarantee is a precondition for the full execution of the licence and for ensuring that obligations under the licence are met.
