SHADOW PAYMENT SYSTEM AND CUSTOMER PROTECTION: AN APPRAISAL OF THE EFFECTIVENESS OF THE SAUDI REGULATORY FRAMEWORK

Abstract

Recently, shadow payment systems (SPSs) succeeded in making unprecedented changes in payment systems and processes. However, SPSs are not subject to the strong regulation and supervision imposed on conventional banks. There are many differences and similarities between the conventional banking system and SPS. Among the most important differences between both systems is SPS operates outside traditional banking regulations. This means its customers cannot benefit from bank regulation and support. Regulators have been made considerable efforts to control SPS measures. Keeping pace with global developments in payment systems, the Kingdom of Saudi Arabia has also allowed and attempted to regulated SPSs. This dissertation analyses whether Saudi Arabia’s legal SPS framework is adequate or not for SPS’s legal impact on the national economy and the customers’ rights. This will determine how Saudi law has preserved the rights of SPS customers and ensure SPSs are not used in violation of the law.