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Editor's PickPakistan revises regulations to encourage fintechs to get into e-payment business

Pakistan revises regulations to encourage fintechs to get into e-payment business

Islamic fintech companies are now incentivized to enter into the electronic payment business in Pakistan as the State Bank of Pakistan (SBP) has issued revised regulations for electronic money institutions (EMIs) with the aim to enhance its outreach and scope of the service.

The updated regulations, issued on the 21st June 2023, now allow EMIs to offer their customers, including minors and freelancers, increased monthly wallet limits, offer new payment services such as ‘Payments Aggregation’, ‘Bill/Invoice Aggregation’, ‘Payment Initiation’, ‘Account Information’, ‘Escrow Services’ for domestic e-commerce transactions, ‘Services via Application Programming Interface to Financial Institutions/Fintechs/Third-Party Service Providers’ and inward cross-border remittances.

The SBP anticipates that the revised regulations will attract more fintech companies from Pakistan and around the world to enter the EMI business in Pakistan. This influx of participants is expected to bring forth innovative, affordable and enhanced payment services, thus advancing digital financial inclusion in the country.

According to the SBP, there has been increasing interest by local and foreign fintech companies to work as an EMI in Pakistan since the issuance of the EMI Regulations in 2019.

The regulations were introduced with the objective to promote digital payments, foster innovation in the payment industry, increase financial inclusion in the country and provide regulatory framework to non-banking entities in the payment landscape.
To date, the SBP has granted approval to four EMIs to launch commercial operations while six EMIs are at different licensing stages. Although it was not disclosed whether the EMIs are Shariah compliant, in Pakistan, it is understood that most if not all are Shariah compliant.

As of March 2023, these EMIs have opened almost 1.6 million e-wallets with total outstanding e-money of PKR2 billion (US$6.95 million).

Most recently, Finja Invest, which is also a Shariah compliant e-wallet platform, became the first P2P financing service provider in the country to receive approval from the regulator to officially run its business.

The IFN Fintech Landscape lists 12 Islamic fintech companies operating in Pakistan. According to the Global Islamic Fintech Index, Pakistan ranks ninth out of a list of 64 countries, with a market size projected to be US$2.8 billion by 2025.


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