KARACHI: Eventually, the Pakistan Telecommunication Authority (PTA) has decided to grant the licenses to private parties with the mandate to establish maintain and operate telecom system as Third Party Service Provider (TPSP) for financial and application services across Pakistan.
TPSP license will permit the licensee to provide technical services for channelling, routing, and switching transactions for branchless/mobile banking among State Bank of Pakistan (SBP)’s Authorized Financial Institutions (AFIs), telecom operator(s) and TPSP(s).
In this regard, the PTA has issued Information Memorandum (IM) setting out the process and other background information to help prospective Applicants to decide if they wish to apply for TPSP license.
According to the IM, the widespread proliferation of cellular mobile services in Pakistan has opened up new avenues of possibility for bringing the unbanked communities into banking net through mobile banking. “To harness the full potential of such services for rural and unbanked population, SBP issued Branchless Banking Regulations while to compliment the SBP regulations, Ministry of Information Technology and Telecom (MoIT&T) issued a “Policy Directive to Support Technical Implementation of Mobile Banking including Mobile Money Transfers and Remittances”.
For the implementation of above mentioned Policy Directive and towards achieving the objective of providing the low cost mobile banking services and greater financial inclusion in Pakistan, PTA and SBP have jointly developed a TPSP framework for interoperability of mobile financial services through the issuance of PTA’s Regulations for Technical Implementation of Mobile Banking and SBP’s Regulations for Mobile Banking Interoperability on 16th May, 2016. These regulations provide an appropriate technological & regulatory framework to maximise the usage and number of bank accounts in Pakistan, which is a main target of National Financial Inclusion Strategy (NFIS), 2015 developed by the Government of Pakistan.
The TPSP License (s) will be issued for 10 years. After due diligence process, the PTA – SBP Joint Regulatory Committee will assess the applications in the light of technical, financial and regulatory requirements. Pursuant to Joint Regulatory Committee decision, PTA shall issue TPSP License (s) to the successful applicants.
The PTA said mobile banking in Pakistan provides a variety of services including fund transfers from account-to-account (A2A), person-to-person (P2P), account-to-person
(A2P), person-to-account (P2A), and bill payments, merchant payments, mobile top-ups, cash-in and cash-out deposits, savings accounts, insurance, loan repayments, donations, balance inquiry etc. M-banking service providers are also providing additional services for school / college fee collection; student scholarship disbursements; funds disbursement & repayments; relief and rehabilitation funds disbursements, salary disbursement to government employees and small business loan disbursement. Various Government collections and disbursements have also been planned through m-banking networks. Mobile banking agents have been instrumental in the expansion of mobile financial services to the un-banked and far-flang areas where traditional bank branches are not available. As of end June, 2016, the combined mobile banking agent network of all providers increased to 352,000, which are 29 times the commercial bank branches (12,000) in Pakistan. Total mobile banking accounts (m-wallets) in Pakistan were 16.9 million at the end of September, 2016, compared to 4.2 million in June 2014. Above 437 million annual m-banking transactions with a volume of over 2,097 billion rupees (approx. $20 billion).