SAMA bans sale of CASHU prepaid cards in Saudi Arabia, CASHU denies claim

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Owing to improvements in telecommunication infrastructure, payment and security systems, Saudi Arab is witnessing increase in E-commerce. Debit cards occupy the largest share of card payments channel in the country. However, young non-banked population of the country are opting for prepaid cards for online purchases.

CASHU, a prepaid payment card, is widely used in the country for online and mobile purchases. The company is based outside of Saudi Arabia with offices in Amman, Jordan, and Dubai and functions through local agents.

Owing to its wider acceptance and inability to track the customer usage and transactions, recently country's central bank Saudi Arabian Monetary Agency (SAMA), has imposed a ban on the sale of CASHU prepaid cards in the country. The Ministry of Commerce and Investment has been instructed to impose the ban to prevent misuse of CASHU cards for illegal activities and money laundering.

The new regulatory reform allowed banks in the Kingdom to issue such prepaid cards in accordance with the rules and regulations issued by the agency for prepaid services.

On the other hand, CASHU has denied any ban imposed by SAMA. Yahoo, who initiated CASHU in 2002, has claimed it to be one of the safest payment methods for online shoppers. The company further stated that in coming two months it plans to expand in the country and launch new products in collaboration with local financial entities. The company also mentioned partnership with SAMA for increasing security standards for e-payments. Currently, CASHU cards are permitted to be used within geographical limits to prevent illegal fund transfers. It also has partnership with Wynyard Group systems to prevent financial crimes by monitoring suspicious transactions.

This event shows growing importance of tracking and controlling prepaid card users and card usage. Globally, there are more stringent regulations coming up for prepaid payment cards which is bound to increase compliance costs. It would be interesting to see if the changing regulations lead to merger and acquisitions across the prepaid card value chain.

To know more and gain deeper understanding of prepaid card industry in Saudi Arabia, click here