New credit card rules redefine consumer protection in Saudi Arabia

Arab News

2 days ago

To strengthen consumer protection and enhance market transparency, the Saudi Central Bank, known as SAMA, last month announced updated regulations on the issuance, operation, and fees of credit cards.
SAMA's updated credit card regulations will replace the previous rules established in 2015 governing the issuance, operation, and charges of credit cards.
The new regulations will take effect within 30 to 90 days. For example, updates to fees and charges will be implemented within 30 days, while standardized disclosure sections — detailing all applicable fees, costs, and benefits — will be incorporated into credit card agreements within 90 days.
The updated rules establish guidelines for credit card issuers to enhance disclosure, improve transparency, and reduce the cost of credit cards for consumers.
The rules also include detailed provisions governing the operational aspects of credit cards to increase consumers' financial awareness and foster a regulatory environment that promotes innovation in the financial sector.
In addition, SAMA has collaborated with international card schemes to review and revise the fees and charges for credit card transactions, as part of its broader strategy to enhance digital payments for consumers and visitors to the Kingdom, in line with the objectives of Vision 2030.
As part of the key updates to fees and charges, cash withdrawals below SR2,500 will incur a fee capped at 3 percent of the transaction amount, while withdrawals of SR2,500 or more will be subject to a maximum fee of SR75.
Additionally, international purchases will now incur a fee of 2 percent of the transaction value. Customers are also allowed to deposit funds exceeding their credit limit and may withdraw these excess amounts at any time without incurring additional charges.
With respect to repayments, customers may pay off their full outstanding balance without being subject to late payment fees, provided payment is made within a mandatory grace period of at least 25 days.
In addition to enhancing transparency and disclosure, the new regulatory provisions are expected to encourage consumers to hold more credit cards, driven by improved fee structures and reduced charges.
SAMA's efforts, in collaboration with international card schemes, to revise transaction fees are expected to encourage broader credit card acceptance among merchants in Saudi Arabia.
This will offer consumers greater payment flexibility alongside MADA cards, particularly as credit card usage at POS terminals and for local online purchases remains free of charge. This will not only provide credit card holders with additional payment options but also help merchants boost their sales and revenues.
Importantly, the updated credit card regulations are expected to bolster the tourism sector in the Kingdom by facilitating credit card payments for foreign tourists, thereby enhancing overall tourism-generated income. It will also support SAMA's strategy to enhance digital payments for consumers and visitors to the Kingdom.
Finally, the regulatory updates will contribute to the Kingdom's transition toward a cashless society and digital economy, in line with the strategic goals of Vision 2030.
They also guide credit card issuers and banks, and reflect how this reform aligns with Saudi Arabia's broader strategy to create a more robust, cashless, and consumer-centric financial environment.
• Talat Zaki Hafiz is an economist and financial analyst. X: @TalatHafiz