| The Central Bank of Oman Enhances Direct Debit Service and launched the Electronic Authorization | | | 4/19/2025 8:00:00 PM | The Central Bank of Oman Enhances Direct Debit Service and launched the Electronic Authorization | the Central Bank of Oman (CBO) has implemented several enhancements to the Direct Debit service. | <p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">As part of its continuous efforts to develop the banking sector and payment services in line with the latest advancement and innovations, and to support digital transformation, the Central Bank of Oman (CBO) has implemented several enhancements to the Direct Debit service. These improvements, made in both operational and technical aspects, facilitate the issuance, processing, and fulfillment of the Direct Debit instrument through electronic means. The objective is to streamline the use of this service, and to enhance its accessibility for individuals and businesses.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">CBO has also collaborated with the relevant authorities to establish the necessary legal steps for beneficiaries to take criminal actions in the event of the returned irrevocable Direct Debit instrument. The National Payment Systems Law (NPLS) No. 8/2018 provides the criminal protection for beneficiaries in the case of Direct Debit instrument return similar to that afforded to cheques.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">It is worth noting that, CBO in collaboration with the banking sector, has introduced the Direct Debit System and the Mandate Management System as soft-launch in 2021. While Licensed banks have taken various measures to offer Direct Debit services to their customers, they faced some challenges during the implementation due to the service being relatively new. However, CBO has addressed all these challenges leading to the completion of all the necessary technical and operational requirements.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Direct debit is considered a payment instrument in which a person (the beneficiary) withdraws a certain amount from the bank account of another person (the payer), and thus it falls within the required payment instruments and is valid for payment in all transactions in the business sectors and between individuals.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">NPSL has introduced this instrument and provided it with the necessary legal framework and criminal protection as Chapter Six of the law included provisions that regulate direct debit and define the roles, duties and rights of all parties dealing with it, while Article (32) of the law defines direct debit as "a payment order issued to debit the payer's bank account for the benefit of the beneficiary, and on request by the latter"</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">The NPSL also provides the necessary criminal protection for this instrument, as Article (63) stipulates that “Whoever deliberately issues an irrevocable direct debit order without a payable or the consideration is insufficient, or who prevents the bank from paying its value by issuing an order not to pay to the beneficiary without a legitimate reason, shall be punishable by a term of imprisonment of not less than (1) one month but not exceeding (2) two years and a minimum fine of not less than OMR (100) hundred but no exceeding OMR (500) five hundreds . The beneficiary who claims through the civil right might request the court to allow him a compensation of an amount equivalent to the unpaid amount of the irrevocable direct debt order and the returns on this amount calculated from the day of presentation of the order for payment, as well as the compensation where appropriate". In addition to that, Article (38) prescribes the statutory limitation period applicable to direct debit. Also, the Executive Regulation of the NPSL issued by the Board of Governors of the Central Bank of Oman pursuant to Resolution No. 1/2019 sets out more detailed provisions for the direct debit service, including the operational procedures for issuing and processing.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">As a result of providing the legal and operational framework for direct debit, it is expected to reduce the use of cheques, especially in recurring payments such as monthly installments to finance the purchase of various goods and services, and this shall reduce in consequence the risks associated with payment by cheque such as forgery and fraud, as well as speeding up the process of collecting payments. Direct debit is an additional payment instrument in the Sultanate of Oman that contributes to providing an appropriate payment mechanism for the introduction of various products and services in the national economy. In order to encourage the public to use direct debit services and enable their expansion in various fields, CBO has decided not to impose any fees on direct debit transactions until further notice.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">Given the significance of Direct Debit service in facilitating the financial transactions between individuals and businesses and promoting the digital transformation witnessed in the Sultanate of Oman across various fields, CBO has launched the electronic authorization for Direct Debit through electronic banking channels provided by banks and issued the necessary instructions to banks on how to implement this service and ensure its execution in accordance with approved standards. Additionally, several banks have in late 2024 launched the electronic authorization service for direct debit for their customers, and it is expected that other banks will complete the implementation of this service during 2025. </span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">This new service will allow bank customers in the Sultanate of Oman to electronically approve Direct Debit authorization through electronic banking services. Electronic authorization is expected to bring multiple benefits to individuals, businesses, and the financial sector. It offers several advantages compared to the current paper-based system, including reduction of operational costs compared to cheques, increasing efficiency through automated process, minimizing error risks, and enhancing transaction security. Moreover, it will reduce transaction processing time and increase the speed of fund transfers between various parties, and provide opportunities for the introduction of new financial services.</span></p><p style="text-align:justify;"><span class="ms-rteThemeFontFace-1 ms-rteFontSize-3">His Excellency Ahmed Al Musalmi - Governor of CBO - emphasized that CBO is diligently working towards the continuous development of payment systems and services in the Sultanate of Oman. This effort aligns with global best practices and standards, supporting Oman's Vision 2040 to achieve a society with less cash usage and to ensure that payment systems and services are on par with advanced economies.<br></span></p> | 0x010100C568DB52D9D0A14D9B2FDCC96666E9F2007948130EC3DB064584E219954237AF3900075E4FF44B3F64489802BE694C5C6FB70300A9BCF8A0432A87429120A5B0A0EDBFF9 | | |