The State Bank of Pakistan (SBP) has refuted recent reports suggesting that payments to Google were held up at the central bank. In an official statement, the SBP dismissed these claims as “baseless and misleading” and emphasized that it strongly rejects all such allegations.
To clarify the matter, the central bank explained that it has designated specific information technology (IT)-related services that domestic firms can procure from overseas. These services can be paid for with foreign currency, up to $100,000 per invoice, to support the operations of these entities.
The designated IT-related services include satellite transponders, global bandwidth, internet services, private line services, software licenses, maintenance and support, as well as services for using databases and electronic media. In order to utilize this facility, entities are required to choose a bank that has been authorized by the SBP. Once authorized, payments for such services can be processed through the designated bank without further regulatory approval.
Recent off-site reviews conducted by the SBP revealed that telecom companies were using Direct Carrier Billing (DCB) to facilitate payments for various digital services, such as video games and entertainment content. Customers were using their airtime to make these purchases, and telecom companies were subsequently sending money abroad to represent these transactions as payments for IT-related services for their own use.
Direct Carrier Billing is an online mobile payment method that allows customers to charge the cost of items to their mobile phone carrier bill. The telecom companies, acting as payment aggregators or intermediaries, were simplifying the process for their users to access services and then transferring money overseas, categorizing these transactions as payments for IT-related services.
Due to the violation of foreign exchange laws, the SBP removed the designation of banks and telecoms for such payments. However, telecom companies have been advised by their banks to resubmit their requests in compliance with regulations for lawful IT-related payments.
For any telco or business intending to act as a payment aggregator or intermediary, involving the outflow of foreign currency, they must individually contact the SBP through their bank to seek specific approval, adhering to the Foreign Exchange Regulation Act, 1947.
