- The Finance Companies Regulation treats BNPL as short-term credit; a provider needs a Restricted Licence Finance Company licence or a partnership with a licensed institution.
- Reported caps: credit of the lower of AED 20,000 or three months of verifiable net income, and total fees of no more than 30% of the original credit amount. We could not open the rulebook itself.
- The licence belongs to the provider, but merchants should verify it, read the agent terms and be careful with in-house instalment plans.
- The Central Bank Law transition ended on 16 September 2026; we could not confirm whether the 2023 figures were re-issued or carried over unchanged.
Under the Central Bank of the UAE’s Finance Companies Regulation, effective 27 December 2023, Buy Now Pay Later is treated as regulated short-term credit that needs a Central Bank licence or a partnership with a licensed institution.
The reported limits for licensed BNPL providers are credit of no more than AED 20,000 or three months of verified net income per borrower, and total fees of no more than 30% of the original amount, which merchants should check against the current rulebook.
Shoppers see BNPL as a payment button, but legally it is a lending product, and the rules sit with the lender rather than the merchant. That still matters for a retailer: your choice of provider, the contract and any in-house instalment plan can all raise regulatory questions. This guide explains who needs a licence, how the caps work, where the sources are strong or weak, and how the 2025 Central Bank Law transition fits in.
| Detail | What applies |
|---|---|
| Regulation | CBUAE Finance Companies Regulation, effective 27 December 2023, recognising BNPL as short-term credit |
| Licence route | Restricted Licence Finance Company, or a partnership with an established licensed financial institution |
| Credit cap | The lower of AED 20,000 or three months of the borrower’s verifiable net income |
| Fee cap | Total fees, including late fees, not above 30% of the original credit amount |
| Maximum term | 12 months, as reported |
| Capital | Reported minimum of AED 20 million or capital funds of 5% of outstanding lending |
“BNPL is lending that happens at the till. The licence belongs to the provider, but the merchant is the one whose customers will be affected if the provider is not authorised.”
How the UAE regulates BNPL
The Central Bank’s Finance Companies Regulation introduced a category called Restricted Licence Finance Companies, which can provide short-term credit to individuals and businesses. Short-term credit is defined as financing with a maturity of under a year, and the regulation formally brought BNPL schemes into that category. Law firm summaries from White & Case, Hadef & Partners and Lexology agree on the broad structure.
A provider that wants to offer BNPL has two routes according to Hadef: apply for a licence directly as a Restricted Licence Finance Company, or partner with an established financial institution. Restricted Licence Finance Companies may contract with agents to offer short-term loans, provided the agents meet the regulatory requirements, which is how merchant-facing arrangements are typically built.
When the regulation took effect, existing unlicensed providers were reported to have 90 days to apply for the relevant licence or stop financing activities. That period has long passed, so a provider operating today without a licence or a licensed partner is the kind of firm a merchant should avoid.
See our guide on payment gateways and merchant accounts for UAE companies for how BNPL sits alongside card and wallet options at checkout.
The credit and fee caps
The figure that causes the most confusion is the credit cap. The summaries say that the total short-term credit a licensed provider or its agent may extend to one borrower must not exceed AED 20,000 or the borrower’s verifiable net income for three months, whichever is lower. A customer earning AED 9,000 a month could therefore be limited to AED 20,000, but one earning AED 5,000 a month to AED 15,000.
The fee cap is stated as a ceiling on the total of fees, charges, penalties and commissions at 30% of the original credit amount. Some summaries add that interest is not charged on the credit, which fits the interest-free instalment model that consumers see, though Hadef describes the interest position as implicit rather than explicit.
These figures were first brought to us in a single secondary summary, and we have now found them stated consistently by three separate law-firm summaries. We could not open the Central Bank rulebook text itself, because the page returned an access error, so we cannot quote the exact wording. Treat the numbers as reported and check them against the current rulebook before putting them in a contract.
Consider a hypothetical customer with a verified net income of AED 6,000 a month who wants to buy furniture worth AED 22,000 on instalments. Three months of income is AED 18,000, which is lower than AED 20,000, so the reported cap would be AED 18,000.
The provider might approve part of the basket on instalments, and the customer would pay the rest by card. If late fees accumulate on an AED 10,000 plan, the reported 30% ceiling would limit total fees to AED 3,000. The customer and amounts are invented.
See our guide on the Central Bank SME customer protection regulation for how consumer-protection principles apply to business customers, which is useful if you sell to both.
Who needs a licence and who does not
The lender, whether a fintech or a finance company, needs the authorisation. A merchant that simply offers a licensed provider as a checkout option is not, on the face of the summaries, itself providing credit, though it may act as the provider’s agent under the contract. The risk grows where a merchant offers its own instalment plan, charges a fee for paying later or finances customers directly. Whether that activity falls within the regulation depends on its structure, and the sources we read did not address it, so take advice before launching an in-house scheme.
Non-bank providers that refer customers to lenders or process the payments may also fall under other Central Bank permissions, such as payment services licences. That is a separate regime from this one. See our guide on the UAE Open Finance Framework for banks and fintechs for data-sharing duties that can affect lenders and fintech partners.
What merchants should check
Start with the provider. Ask for confirmation of its Central Bank licence or the licensed institution behind the product, and keep the evidence. Check the contract for who sets the customer fees, who handles refunds and chargebacks, when you are paid and what happens if the provider fails or loses its licence.
Next, look at the customer experience. Product pages that show instalment prices should make clear who the lender is and what late payment costs. UAE consumer-protection rules for e-commerce, including digital invoicing and marketing consent, apply to the sale itself, and a misleading “pay later, no cost” claim could be a problem if fees can follow.
Finally, consider your own risk. A refund on an instalment purchase must be coordinated with the provider so that the customer’s plan is cancelled correctly. See our guide on UAE Consumer Protection 2.0 for e-commerce rules for the refund and marketing rules that apply to the underlying sale.
The 2025 Central Bank Law transition
Federal Decree-Law No. 6 of 2025 on the regulation of financial institutions and activities and insurance business came into force on 16 September 2025, with a one-year transition that ended on 16 September 2026. That deadline has passed and no extension was reported. The law consolidates oversight of banks, insurers, finance companies, exchange houses, payment providers and technology enablers.
For BNPL, the point is that a provider whose licence or structure was not aligned by 16 September 2026 is operating after the transition. The reported maximum administrative fine is AED 1 billion, a figure cited by law firms and in our separate guide, but we have no information on how the Central Bank intends to apply it to small BNPL operators.
We could not confirm whether the 2023 Finance Companies Regulation figures have been re-issued, amended or carried over unchanged under the new law, and a merchant should not assume either way. See our guide on the Central Bank Law and the compliance deadline that has already passed for the full transition picture.
Business borrowers and the wider credit picture
The same regulation speaks of short-term credit to individuals and businesses, and a growing group of providers offers trade credit or pay-later terms to companies. The caps summarised above are described in the context of a borrower’s verified net income, which fits consumers better than companies, and we did not find guidance on how the limits work for business borrowers.
For a small business thinking of using pay-later credit to buy stock, the safer comparison is with a traditional facility, where terms, security and fees are documented. See our guide on UAE business loans for new companies for what a young company can realistically access.
A merchant checklist before you switch BNPL on
Treat the integration like onboarding a lender, not adding a plug-in. Ask the provider for its Central Bank licence reference or the name of the licensed institution that funds the product, and check that the name on the checkout matches the name on the licence. Confirm in writing whether you are acting as an agent and, if so, what you are allowed to say to customers about credit.
Review the economics. Providers typically charge the merchant a fee per transaction, and the caps described above apply to what the customer pays, not to what the merchant pays. Compare the merchant fee with your card acceptance cost, include the cost of refunds and failed collections, and ask who bears fraud losses.
Look at settlement and refund mechanics. A common friction is a partial refund on an instalment plan, where the provider must adjust the schedule. Test that process with a real order before launch. Finally, set a review date, because the regulatory position is still moving after the Central Bank Law transition and a provider’s status can change.
Keep customer communication consistent as well. Order confirmations, returns pages and customer service scripts should name the lender and explain how a refund affects an instalment plan. When customers are confused about who they owe, complaints land on the merchant first, even though the credit relationship is with the provider.
What we could not confirm
The primary rulebook page for the Finance Companies Regulation was not accessible to us, so the caps, the capital figure, the 12-month term and the licence period (reported as an initial three years) rest on law-firm summaries. The sources also give slightly different dates for introduction, with one saying 29 September 2023 and others giving 27 December 2023 as the effective date, so we use the effective date.
We also found no published penalty schedule specific to BNPL, no guidance on merchant-agent obligations and no confirmation of how the caps apply to business customers. Where an exact figure matters to a contract, quote the rulebook.
Common mistakes when approaching BNPL licensing and caps
- Assuming BNPL is just a payment method and that the merchant has no stake in the provider’s licence.
- Quoting the AED 20,000 and 30% figures as settled without checking the current rulebook.
- Launching an in-house instalment plan with a late fee without asking whether it counts as regulated credit.
- Advertising “no cost” instalments when late fees can add up to the reported ceiling.
When professional help is worth it
Advice is worth having before you sign a BNPL provider agreement, build your own instalment product or invest in a fintech lender. A financial regulatory lawyer can confirm the provider’s licence status, read the agent terms and tell you whether a planned scheme counts as credit.
E.zone, which helps online businesses set up their licences and payment arrangements, can help structure the commercial side. See e.zone’s guide on the role of AML controls in small regulated businesses for compliance habits that matter around payments.
This is general information and not legal or financial advice. Regulations change, so check the current Central Bank rulebook and the status of your provider before relying on any figure here.
Frequently asked questions
Is Buy Now Pay Later regulated in the UAE?
Yes. The Central Bank Finance Companies Regulation, effective 27 December 2023, brought BNPL into regulated short-term credit. Providers need a Restricted Licence Finance Company licence or must partner with a licensed financial institution.
What is the BNPL credit cap in the UAE?
Law-firm summaries report that credit to one borrower must not exceed the lower of AED 20,000 or three months of the borrower verifiable net income. We could not open the Central Bank rulebook, so check the current text before using the figure in a contract.
What is the BNPL fee limit?
Total fees, charges, penalties and commissions are reported to be capped at 30% of the original credit amount. This is a reported figure to verify against the rulebook.
Does a merchant need a licence to offer BNPL at checkout?
On the face of the summaries, a merchant offering a licensed provider as a checkout option is not itself providing credit, though it may act as the provider agent. An in-house instalment plan or late fee may be different, and the sources did not address it, so take advice.
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