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SBP Directs Banks to Encourage Mobile Banking by Abolishing Service Charges

by Newsweek Pakistan

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In statement, central bank says this will encourage digitization, use of payment cards

The State Bank of Pakistan (SBP) on Wednesday directed all banks to abolish service changes for mobile and internet banking to encourage the public to use digital channels such as payment cards and funds transfer facilities.

Banks should not levy any “activation, subscription or annual charges” on customers who use mobile or internet banking for services such as bill payments, funds transfer/IBFT, beneficiary management, limit management, credit and debit card management, stop check payment, read a statement issued by the central bank. This, it said, would encourage the use of internet and mobile banking services.

Similarly, said the State Bank, banks should make arrangements allowing their customers to make online payments to the maximum number of billers. “The digitization of the entire payment process is hindered if the customers can make payments to only those billers that are registered with their own bank,” it said, adding that the use of payment cards could be facilitated by banks issuing “debit card to all new bank account holders and customers who have not previously opted for a debit card, unless the customer opts not to receive any payment card.” This requirement would not apply, stressed the statement, on illiterate customers, photo account holders and visually-impaired persons.

The central bank also advised banks to cease the practice of using paper-based instruments to authenticate their customers, noting that the existing EMV card infrastructure provides secure authentication. “The banks/MFBs are now permitted to authenticate their customers at branch counters using chip-and-pin cards and 2 Factor Authentication and provide them banking services,” read the statement.

“Considering the significance of digitization, the banks have also been advised to create a role of Chief Digital Officer, who would be responsible for steering the digitization efforts,” directed the SBP. It said digitization should also be made part of key performance indicators and progress be monitored at least every six months.

The bank noted that these steps would complement other initiatives to promote digitization in Pakistan, including streamlining payment card security regulations; providing repayment facility to bank borrowers on alternate delivery channels; launching the Raast instant payment system; waiving charges on fund transfer and RTGS transactions for consumers during the COVID-19 pandemic; and improving payment card infrastructure in Pakistan by rationalizing bank charges. “These instructions not only made the business of deployment of POS machines a profitable proposition for the financial industry, but also value added solution for consumers,” it added.

“SBP will continue to promote digitization in the country and expects the industry to support these efforts, resulting in increased convenience for the customers to fulfil their financial needs through safe, rapid and secure digital infrastructure in Pakistan,” the central bank concluded.

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