Saudi Arabia Caps Credit Card Fees, Enhances User Transparency
The Saudi Central Bank, known as SAMA, has announced a comprehensive update to the rules governing credit card issuance and operations in the Kingdom. These new regulations are designed to reduce consumer costs, bolster transparency, and ensure that all stakeholders—citizens, residents, and visitors—have a clear understanding of their financial obligations and rights. The rules, which will come into effect between 30 to 90 days from the date of announcement, are also aligned with Saudi Arabia’s broader economic transformation and digital finance strategy under Vision 2030.
Revised Fee Structure Makes Credit Cards More Affordable
A central part of the regulation changes revolves around making credit cards more consumer-friendly. Cash withdrawal fees have been adjusted to be more reasonable. For transactions below SR2,500, issuers can charge a maximum of 3% of the withdrawal amount. For amounts above SR2,500, fees are capped at SR75. Previously, a flat SR75 was charged for withdrawals up to SR5,000, and transactions over that amount incurred a 3% fee, up to a maximum of SR300.
International purchases made using credit cards will now incur a standard fee of 2% of the transaction value. This update simplifies what was often a complicated and opaque structure, providing consumers with more clarity when shopping abroad or making international online purchases.
In a boost to the Kingdom’s digital transformation, e-wallet top-ups using credit cards are now completely free. This move is expected to accelerate the adoption of digital payments and support Saudi Arabia’s ambition to move toward a cashless economy.
Transparency and Communication Obligations Tightened
The new rules place a strong emphasis on transparency. Credit card issuers are now required to notify customers immediately of any financial transaction via SMS. Detailed account statements must also be sent regularly through SMS to ensure that users remain informed of their spending and available balances.
If there are any changes to fees, issuers must inform customers through SMS. Importantly, customers then have a 14-day window in which they can terminate their agreement without penalty. This safeguards users against sudden or unwelcome fee hikes and gives them a clear exit option.
Moreover, to empower financial decision-making, banks must now provide users with digital tools that help estimate potential charges—including international transaction fees and reward calculations—before making a purchase.
Customer-Friendly Repayment Policies Introduced
To foster responsible borrowing and repayment, SAMA’s new regulations mandate a minimum grace period of 25 days during which customers can repay their full outstanding balances without incurring late fees. This update encourages timely repayment while preventing consumers from falling into cycles of debt due to minor delays.
Another flexible feature in the regulations is the allowance for customers to deposit additional funds beyond their credit limit. These excess funds can be withdrawn at any time without any additional charges. This functionality makes credit cards a more versatile financial tool for managing liquidity and personal finances.
Standardized Documentation Enhances User Understanding
To eliminate confusion from varying bank policies and language, SAMA has now required that all credit card agreements follow a standardized template. This includes unified layouts for listing fees, benefits, and other terms and conditions. The measure is expected to improve consumer understanding and reduce disputes arising from misinterpretations.
Consumers will now have a consistent experience across banks, allowing them to compare offers more effectively and make better-informed decisions. This is particularly beneficial in a market where financial literacy continues to grow alongside a rapidly modernizing banking sector.
Global Coordination and Strategic Industry Engagement
These regulatory reforms have been introduced following consultations with leading global payment companies. SAMA collaborated with international industry players to benchmark and reduce transaction costs, ensuring that the updated fee structures and consumer protections align with global best practices.
This strategy not only enhances the customer experience within Saudi Arabia but also raises the Kingdom’s profile as a competitive and well-regulated financial hub. Such alignment with international standards will be crucial as Saudi Arabia continues to attract global investments and expand its financial services sector.
Promoting the National Digital Payment Vision
The updated credit card rules are part of a broader initiative to create a robust and accessible digital payment ecosystem. By removing fees on e-wallet top-ups and setting fair usage standards, SAMA is encouraging wider adoption of cashless payment systems across sectors.
The measures are also in line with Vision 2030’s goals to foster innovation, increase financial inclusion, and diversify the economy. As more citizens and businesses embrace FinTech solutions, the financial infrastructure must evolve to support growth without compromising user rights or security.
Broader Economic and Consumer Impact Expected
While the full effects of these changes will unfold over time, early signs suggest they will offer significant benefits to consumers. Lower fees, improved communication, and more consistent contract terms will make it easier for users to manage their finances and avoid unnecessary costs.
By allowing users to cancel contracts upon fee changes and ensuring repayment flexibility, the new rules help establish a more equitable relationship between consumers and financial institutions. These types of protections are essential in maintaining public trust, particularly as credit cards become more integrated into everyday transactions.
Looking Ahead to Implementation and Monitoring
SAMA will oversee the implementation of these new rules and monitor their impact on the market. Banks and credit card issuers are expected to make the necessary adjustments within the transition period. Consumers are encouraged to review communications from their providers and take advantage of the tools and transparency initiatives being introduced.
As financial products become increasingly digitized, the Saudi Central Bank’s proactive approach places the Kingdom on strong footing to meet the challenges and opportunities of the future. These reforms are not only practical in nature but are strategically significant as Saudi Arabia charts a new course for financial innovation and inclusion.
In summary, the revised credit card regulations are a forward-thinking response to the evolving needs of consumers and the demands of a modern economy. By addressing core issues such as high fees, unclear terms, and limited communication, the new rules reflect a strong commitment to consumer rights, regulatory clarity, and digital advancement.
As the banking sector adapts to these changes, Saudi Arabia continues to strengthen its position as a financial leader in the region and beyond—demonstrating that regulation, when done effectively, can serve both growth and the public good.
