The State Bank of Pakistan (SBP) has introduced revised regulations that empower Electronic Money Institutions (EMIs) or fintech operators to offer cross-border e-money products and services, including inward remittances and payment through cards involving foreign exchange outflows. The revised regulations expand the scope of work for EMIs, enabling them to extend cross-border services to their customers with prior approval from SBP.
Under the revised regulations, EMIs can approach SBP’s Exchange Policy Department through an Authorized Dealer to propose and offer such cross-border products and services. The application process requires EMIs to submit a business proposal, draft agreements, detailed terms and conditions, and value proposition regarding arrangements with the Authorized Dealer.
The regulations also allow EMIs to disburse inward remittances in Pakistani Rupees (PKR) to their wallet holders through interbank funds transfer (IBFT) functionality or SBP-operated systems via their Trust/Settlement Bank.
The SBP has received positive feedback from market participants since the issuance of these regulations. Several entities have already obtained licenses to provide electronic money services, and the regulations have garnered favorable responses from foreign investors and institutions.
To promote the uptake of e-money services and encourage innovation, SBP has revised the regulations based on local experiences and international best practices. The updated regulations also include provisions for e-money wallets for minors and enhanced e-money instruments for freelancers, subject to certain conditions and verifications.
The objectives of these revised regulations align with SBP’s vision of promoting digitization in the financial sector and expanding the reach of EMI operations. The regulations aim to attract more fintech companies, both domestically and internationally, to enter the EMI business in Pakistan, offering innovative, affordable, and improved payment services and contributing to digital financial inclusion in the country.
With four EMIs already approved for commercial operations and six others in different licensing stages, the revised regulations are expected to further enhance the outreach and capabilities of these fintech-enabled payment companies. As of March 2023, approximately 1.6 million e-money wallets have been opened by EMIs, totaling Rs. 2 billion in outstanding e-money.
