Egypt’s Central Bank Issues the Licensing Framework for PSOs and PSPs

On 19 June 2025, the Central Bank of Egypt (“CBE”) issued long-anticipated Licensing and Registration Rules for Payment System Operators (“PSOs”) and Payment Service Providers (“PSPs”) (the “Rules”). Issued pursuant to Articles 184 to 200 of Banking Law No. 194 of 2020, the Rules aim to strengthen the regulatory environment for Egypt’s digital payments sector and drive the development of a secure, competitive, and innovation-driven ecosystem.

While the Rules address both PSOs and PSPs, this client alert focuses primarily on providing a brief overview of the new rules governing the PSPs.

Key Takeaways:

• New licensing categories (Category A & B) with tiered capital requirements based on the payment services that will be conducted by the PSP.
• Direct licensing of PSPs to undertake payment services.
• 12-month grace period to comply.
• PSPs may issue payment instruments and provision of payment accounts’ services as part of the payment services enshrined in the Rules.

1. Scope and Transitional Grace Period

The Rules apply to any natural or legal person, whether based inside or outside Egypt, that operates a payment system or provides one or more payment services (as detailed below) where the recipients of such services, or the beneficiaries of such payment system, are customers residing within the Arab Republic of Egypt.

The Rules do not apply to, inter alia, direct cash payments, paper instruments, telecom-based payments of up to EGP 3,000 per user per month, provided it relates to calling services, and payment transactions arising from the additional services provided by telecom companies, including the purchase of electronic content and charitable donations made to entities duly licensed to receive and collect donations.

Entities already offering payment services prior to the issuance of the Rules are granted a twelve (12) months transitional grace period to regularize their position by applying for the appropriate license with the CBE, corresponding to the activities they provide. During this period, such entities may continue their operations, subject to compliance with any requirements set by the CBE in that regard.

However, our reading of the Rules suggests that prior CBE approvals previously granted to banks partnering with entities providing technology solutions for payment services, including payment aggregation, facilitation, and the issuance of certain instruments, shall remain valid and unaffected. That said, new entrants may not enjoy the same flexibility under legacy outsourcing models. The Rules introduce detailed provisions on outsourcing, which offer a more defined and structured path that may prove more viable for new players compared to earlier, less formal arrangements.

2. Scope of Payment Services

The Rules have provided a broad and comprehensive scope of payment services that may be provided by licensed PSPs, which include (i) cash deposits and withdrawals from payment accounts via electronic acceptance channels, (ii) execution of payment transactions and money transfers to payment accounts, including direct debits, card payments, and standing orders, (iii) issuance of payment instruments and electronic acceptance channels, (iv) electronic acceptance services, such as payment technology, facilitation, and cash collection, (v) sending and receiving local currency remittances regardless of the original currency, (vi) initiation of payment orders, (vii) payment account information services, (viii) payment accounts’ services; and (ix) issuance of electronic money.

While the list outlines several clearly defined service categories, certain services, such as payment account services and payment account information services, raise ambiguities that require further legal assessment, including with respect to how the dynamics between the PSP and the banks under the new Rules will be structured.

3. Licensing & Capital Requirements

• License Categories:

The Rules introduce a structured licensing framework under which applicants may apply for distinct categories of licenses based on the nature of the payment services to be provided, which accordingly affects the capital requirements for each respective licensing category. In that regard, the Rules designate a minimum capital requirement of:

• EGP 30,000,000 for Category A License which entitles the PSP holding it to provide all the aforementioned payment services, provided that the average monthly value of executed payment transactions through the PSP exceeds EGP 750,000,000 during the twelve-month period preceding the date of calculating the average;
• EGP 20,000,000 for a license entitling the PSP to provide the issuance of payment orders and payment accounts’ information services;
• EGP 10,000,000 for Category B License which entitles the PSP holding it to provide all the aforementioned payment services except for the issuance of payment orders and payment accounts’ information services, provided that the average monthly value of executed payment transactions through the PSP is less than EGP 750,000,000 during the twelve-month period preceding the date of calculating the average;

While the definition of a Category A License appears to cover the full spectrum of payment services outlined in the Rules, an interesting question arises as to whether this includes, without further conditions, the provision of payment order issuance and payment account information services. The operative language suggests that offering either of these services may trigger a distinct capital requirement, which invites further consideration of whether such services are inherently included within the scope of the Category A License or require additional thresholds. This remains an area where further clarification or interpretive guidance may be expected.

• Licensing Process

In addition to the foregoing, the Rules stipulate for a two-step process in order for an entity to be licensed as a PSP (the “Applicant”), namely, (i) procurement of a prior approval on the incorporation of a PSP or the amendment of the activities of an already existing entity to include the provision of payment services (the “NOC”), and (ii) application for a PSP license.

The CBE may render its decision on the NOC application within 90 days from the date of application, extendable to an additional 90 days, and the same durations apply for the PSP license application if the NOC is procured. The NOC shall be valid for 6 months during which the Applicant shall apply for the PSP license; otherwise, the NOC will be voided.

• Key Licensing Requirements

Applicants must submit an operational model including each payment service in detail along with all the corresponding policies for providing customer service and handling customers’ complaints as well as the cybersecurity policies, AML and CFT policies, outsourcing policies, documents outlining the integration points, and other policies covering internal governance and risk management. It is noteworthy that a letter of guarantee having the value of two percent (2%) of the issued capital shall be issued for the benefit of the CBE by each Applicant which shall be renewable so long as the PSP’s license is valid.

4. Compliance and Governance

The licensed PSPs are subject to the supervisory and regulatory authority of the CBE. This includes compliance with the CBE’s rules on governance, risk management, cybersecurity, outsourcing, and customer protection. Additional obligations may be imposed by the CBE based on the provider’s activities.

Prior CBE consent is required before the cessation of any operations, launching new services, amending constitutional documents, or effecting changes of control, senior management or key outsourcing contracts.

Licensees must notify the CBE of any event that may impair business continuity or harm customers, including cyber-incidents and reputational crises.

5. Practical Implications: What Will Change Operationally?

The new Rules introduced by the CBE moves from indirect oversight, where non-bank entities operated through banks, to a model of direct licensing. Under the new Rules, licensed PSPs are now authorized to issue payment instruments, initiate transactions, and operate payment accounts. However, certain structural dependencies may remain. In comparable jurisdictions, access to clearing and settlement systems is typically reserved for institutions holding central bank settlement accounts. Unless this access is expressly extended, PSPs in Egypt may still need to maintain operational links with banks to complete settlement processes. Whether this model evolves into broader direct access remains to be seen and will be critical to how PSPs structure their operations.

Another important consideration is whether licensed PSPs can now become principal members of card schemes and obtain their own Bank Identification Numbers (BINs), or whether they will continue to require sponsorship from licensed banks. While the Rules entitle PSPs to issue payment instruments, the practical route to full scheme participation is not yet fully defined. These questions open up significant legal and strategic implications that merit early evaluation.

It is also worth examining how the relationship between payment FinTechs and banks will be redefined. As more firms consider transitioning from being approved service providers to fully licensed PSPs, the cost-benefit analysis of such a move becomes more pressing. This transition may carry operational, legal, and financial consequences that will require close review. We are already advising several market participants on how best to approach this regulatory shift in light of their business model and partnership structure.

One particularly notable advantage of the new licensing status is the exemption from value-added tax. This development, long sought by fintech companies, can materially improve margins and pricing models for licensed PSPs. The application of this exemption in practice, and the conditions surrounding its scope, are key points on which we are actively assisting clients.

For fintech and payment businesses seeking clarity on how to navigate these changes, we would be pleased to provide more detailed insight tailored to your operational and licensing roadmap.

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