Banking

Regulations for Electronic Money Institutions launches in Pakistan

KARACHI, April 1, 2019: The State Bank of Pakistan (SBP) has issued Regulations for Electronic Money Institutions (EMIs) to foster innovation in the payments industry and promote financial inclusion in the country.

According to SBP, in order to promote financial inclusion, it has been decided to license non-banking entities as E-Money Institutions (EMIs) as per the attached Regulations under the powers conferred on State Bank of Pakistan (SBP) by Payment Systems and Electronic Fund Transfers Act, 2007.  

These Regulations will remove entry barriers and provide level playing field to EMIs in payment’s arena which will eventually lead to the development of payments ecosystem in Pakistan.

SBP therefore expects that the prospective EMIs will offer convenient, cost effective, interoperable and secure digital payment products and services to end users in the country. 

These Regulations shall come into force with immediate effect. These regulations are being issued with objectives:

  1. To provide regulatory framework for EMIs desirous of offering innovative payment services to the general public.
  2. To prescribe minimum service standards and requirements for EMIs to ensure delivery of payment services in a safe, sound and cost effective manner.
  • To outline the permissible activities that can be carried out by an EMI and its agents’ network.
  1. To provide a baseline for protection of EMI’s customers.
  2. To achieve the SBP’s objective of digital payments and financial inclusion.

Payment Systems and Electronic Funds Transfer Act, 2007 defines e-money as monetary value stored on an electronic device or payment instrument issued on receipt of funds and accepted as a means of payment by entities other than issuer.

E-money globally is widely used for making retail payments in an economy and has played a crucial role in digitizing different types of payments in various countries.

EMIs are entities that offer innovative, user-friendly and cost effective low value digital payment prepaid instruments like wallets, prepaid cards, and contactless payment instruments including wearables.

Globally, these innovative payment instruments have been instrumental in promoting cashless payments like merchant checkouts, e-commerce, transportation and toll payments etc.

Traditionally, payment instruments in Pakistan are issued by banks without participation of non-banking entities.

New technological innovations are now enabling non-banking sector to deliver innovative and efficient payment services to consumers at much lower cost. These regulations are primarily aimed at removing entry barriers for non-banking entities by providing them a guiding as well as an enabling regulatory framework for the establishment and operations of EMIs in Pakistan.

These regulations also address potential risks in order to ensure consumer protection in line with legal framework of the country while promoting digital payments and financial inclusion.

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