Financial Crime World

Jordan’s Central Bank Issues New Rules for Open Finance Services

A Major Step Forward in Financial Inclusion

Amman, Jordan - The Central Bank of Jordan (CBJ) has issued new instructions governing Open Finance services by all banks operating in the Kingdom, as well as online payment and money transfer companies subject to the bank’s supervision and control. This move marks a significant step forward in promoting financial inclusion and innovation in the region.

Overview of the New Regulations

The new regulations require any bank licensed to practice banking activities in Jordan, branches of foreign banks, and payment and electronic funds transfer companies operating in the Kingdom to comply with the Regulation of Open Finance Services Operations Procedures. The deadline for implementation is within one year from the date of issuance, although the Central Bank may extend this period.

Objectives of the New Regulations

The new regulations aim to foster innovation and competition while ensuring a high level of security, confidentiality, and transparency in Open Finance services. The rules define two types of services:

  • Account Information Service (AIS): Allows third-party providers (TPPs) to access customer data from banks.
  • Payment Initiation Service (PIS): Enables TPPs to initiate payment transactions on behalf of customers.

Requirements for Third-Party Providers

TPPs are required to commit to the policies and procedures for identification and authentication of customer identity, as well as to ensure transparency and access to information for customers. Banks are also required to:

  • Create and regularly update a registry of TPPs
  • Provide information on whether the amount necessary to carry out a payment transaction is available in the payer’s account

Challenges Ahead

While the new regulations mark a significant step forward, there are still some aspects that require further clarification. For example:

  • The mechanism for monitoring commissions charged by TPPs is not yet defined, which could lead to additional expenses for TPPs.
  • There is no unified formula for calculating fees for API usage, which could create uncertainty and unpredictability.

Expected Growth of Open Finance Market

Despite these concerns, the new regulations are a significant step forward in promoting financial inclusion and innovation in Jordan. The country’s Open Finance market is expected to grow by 25% annually over the next five years, driven by the impact of the COVID-19 pandemic and the young age and digital literacy of the population.

Conclusion

The new regulations mark a significant step forward in promoting financial inclusion and innovation in Jordan. While there are still some aspects that require further clarification, this move is seen as a major step forward in promoting financial inclusion and innovation in the country. Jordan’s regulatory environment has been praised for its progressive vision, and this move is expected to attract FinTech companies and investors looking to tap into the region’s growing demand for digital financial services.