The United Arab Emirates (UAE) is rapidly becoming a hub for e-commerce and online businesses, with a growing number of consumers turning to the internet for shopping and payments. Dubai, in particular, has emerged as a leader in the region's e-commerce market, driven by its highly connected and tech-savvy population and supportive government initiatives to promote innovation and digital transformation. The UAE's high usage and acceptance of new technology presents a compelling opportunity for investors to establish a payment gateway company in the country to meet the growing demand for simple and secure payment solutions.

What is a payment gateway?

A payment gateway is a technology that allows businesses to accept and process online payments from their customers. It acts as a bridge between the merchant's website or application and the financial institutions involved in the transaction, such as banks and credit card networks.

When a customer makes a purchase online, the payment gateway securely captures the customer's payment information, such as credit card details or online banking credentials. It encrypts this sensitive data to ensure its security during transmission. The payment gateway then forwards the information to the respective financial institution for authorisation and settlement.

Payment gateways are designed to handle various payment methods, including credit cards, debit cards, e-wallets, and bank transfers. They provide a seamless and secure payment experience for both businesses and customers, facilitating the smooth flow of online transactions.

As the digital landscape continues to evolve, the demand for companies that can provide payment gateway services is skyrocketing creating a lucrative opportunity for investors to capture market share in this growing industry.

Why choose the Dubai to establish your payment gateway company?

There are a multitude of compelling reasons to set up a payment gateway company in Dubai. First and foremost, it boasts a strategic location that bridges continents, providing access to global markets. Its robust infrastructure, advanced technology, and well-established regulatory framework also provide a secure and supportive environment for fintech ventures.

Dubai's status as a global financial centre further adds to its allure. With a rapidly growing e-commerce sector and a strong commitment to innovation, the city presents immense opportunities for entrepreneurs looking to tap into the digital payment industry with their payment gateway UAE business setup in Dubai.

Mainland or free zone: Where to set up a payment gateway company in the UAE

One of the biggest decisions when establishing a business presence in the UAE is selecting between a mainland setup or registering in one of the country’s free zones. Both have pros and cons and the right option for you will depend largely on your setup and operational budget and your target market and required geographic reach.

Mainland companies have more flexibility in terms of the scope of business activities they can engage in. They can conduct business across the UAE and internationally, and there are typically no restrictions on the types of activities. Free zones, however, have specific regulations and limitations on the types of activities permitted with each free zone usually dedicated to specific industries or sectors. Free zone companies wishing to trade on the mainland may need to appoint a local agent or distributor depending on the nature of their business and must seek approval from the relevant Department of Economic Development (DED) in the emirate where they intend to conduct mainland business activities.

How to set up a payment gateway company in the UAE

There is a minimum share capital requirement of AED 200,000 for payment gateway formations within the financial centres of DIFC and ADGM, whereas, for mainland setups the requirement is much higher at approximately AED 100 million. It may, therefore, be preferable to obtain a regulated licence from ADGM or DIFC.

The payment gateway activities will generally be classified under Category 4 or 3c financially regulated activities and as such, may require Central Bank approval. However, the specific licence category will depend on the business model and intended activities.

The following is an example set up procedure for a Regulated Category 3c licence within DIFC which allows the licensee to provide, arrange and advise on money services:

1. Submission of a business plan detailing operational requirements
2. Application to the Dubai Financial Services Authority (DFSA) for in principle approval (6-8 months)
3. Company setup (2-4 weeks)
4. Bank account opening and capital deposit (1-2 months)

5. Verification of meeting in principle approval conditions (1-3 weeks)

6. Issuance of licence from the regulator (1 week)

The total timeframe for this will be 8-10 months.

Other requirements for setting up a payment gateway company in the UAE

General DIFC requirements for a Category 3c company formation are:

• Regulated business plan
• 3 Year Financial Projections
• Compliance manuals as required for application
• Applications form required for submission – commercial licence and registration, DFSA for the activity
• Due diligence of key personnel as required by the authority, minimum of 4 (2 directors, one of them can be SEO; FO; CO/MLRO)
• Correspondence with the authority
• Arrange and attending meetings as required with the authority
• Professional indemnity insurance
• Office lease in DIFC (4 visas, small office)

Other jurisdictions to consider for setting up a payment gateway company in the UAE

As well as DIFC, there are several other prominent free zones in the UAE which cater to tech companies and offer incentives such as accelerator programmes, access to funding, resources and support. These include:

1. Dubai Technology Entrepreneur Centre (DTEC) - Dubai Silicon Oasis Authority: DTEC is a free zone dedicated to technology and innovation. It offers an incubation program and accelerator initiatives to support startups, including those in the fintech sector. It provides access to mentorship, networking events, funding opportunities, and a collaborative environment.
2. Dubai Multi Commodities Centre (DMCC): DMCC is a well-established free zone in Dubai that offers a range of support services for businesses. It provides access to funding and investment opportunities through its DMCC Crypto Centre. It also has a dedicated Innovation Hub to foster collaboration and innovation.
3. Ras Al Khaimah Economic Zone (RAKEZ): RAKEZ is a cost-effective free zone located in Ras Al Khaimah. It provides various services and facilities to support startups and businesses. RAKEZ has initiatives like its Business Incubation Centre and Funding Support Programme, which offer mentorship, access to investors, and financial assistance.
4. Sharjah Research, Technology and Innovation Park (SRTI Park): SRTI Park is a knowledge-based free zone in Sharjah that focuses on research, innovation, and technology. It offers a supportive ecosystem for tech startups, including those in the fintech sector. SRTI Park provides access to funding opportunities, incubation programs, and collaboration with research institutions.

How can PRO Partner Group help?

Setting up a payment gateway company in the UAE as a foreign investor can be challenging. Navigating complex regulations, obtaining necessary licences, building trust with local partners, and understanding the local market and competition is crucial for success.

PRO Partner Group has an experienced team with in-depth knowledge of business practices in the UAE and close connections with key government departments.

We can advise you on the most appropriate activity, licence and jurisdiction to establish your payment gateway company and assist you with incorporating your company, registering with all required regulatory authorities and obtaining all necessary visas and approvals.

If you need assistance with this or with any other related company setup, restructuring, local partner or Visa and PRO support matter in Abu Dhabi, Dubai, the wider UAE, Oman, Qatar, Bahrain and Saudi Arabia then please do get in touch with us on +971 (0)4 456 1761 for Dubai or +971 (0)2 448 5120 for Abu Dhabi, email us at info@propartnergroup.com or complete the contact form below and we will be delighted to assist you.