Pakistan Telecommunication Authority (PTA) has set up Rs 1 million initial license fee for Third Party Service Providers (TPSP) who will be playing the role of a bridge between telecom operators and banks for providing advanced mobile banking services throughout the country.
Pakistan Telecommunication Authority (PTA) offered the long awaited Third Party Service Providers (TPSP) licenses in the mobile-banking sector of the country by inviting applications from interested companies for a 10 year license.
In the Information Memorandum issued, the authority said that Initial License Fee (ILF) of Rs. 1,000,000/- (Pak Rupees one million) shall be paid within 15 days of the intimation letter from PTA to issue TPSP license.
The Annual License Fee (ALF), equivalent to 0.5% of the Licensee’s annual gross revenue from Licensed Services, will be paid annually by service providers.
Each Applicant will also be required to submit along with its application a non-refundable processing fee of Rs. 50,000/- in the form of PO/DD in favor of “Pakistan Telecommunication Authority”.
Licenses will be granted within 15 days of having received payment of Initial License Fee in line with the IM.
Technical Requirements For TPSP
The licensee should be capable of switching and routing all interbank Wallet to Wallet and Wallet to bank account fund transfers from BB Issuer to BB Acquirer through an Authorized PSO which will be responsible for clearing and providing day-end report(s) for reconciliation.
However, settlement will be done at SBP as per existing mechanism. On the other hand, TPSP will be maintaining logs of routed transactions, security and privacy of information passing through its systems and providing high quality of service, availability of resources, network redundancy, security/secrecy, authenticity and non-repudiations of financial and technical transactions in addition to all such requirements set out in the Regulations for the Implementation of Mobile Banking, 2016 and Regulations for Mobile Banking Interoperability.
The licensee shall also set up unified USSD channel platform to open and access mobile account(s) offered by any of branchless banking provider of his choice e.g. Asaan Mobile Account (AMA), accessible to subscribers of all cellular mobile operators and facilitation for any-to-any model.
The TPSP should also integrate itself with NADRA for real-time verification of customer credentials to facilitate account opening.
Scope of Work
TPSP license authorizes the licensee to establish, maintain and operate for the provision of Financial and Applications Service Provider and permits the channeling, routing, and switching transactions for branchless/mobile banking only under Service Level Agreement (s) between financial institution (bank), cellular mobile operator(s) and TPSP(s).
The TPSP License shall be granted on nationwide basis for the whole of Pakistan excluding Azad Jammu & Kashmir (AJ&K) and Gilgit Baltistan (GB).
Mechanism By PTA – SBP Joint Regulatory Committee
Mobile-banking is an emerging sector which is being regulated by Pakistan Telecommunication Authority (PTA) and State Bank of Pakistan (SBP).
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. Thereafter, authorization and approval for commercial launch will be issued as per process. PTA reserves the right to modify, amend, supplement, cancel, annul or replace any or all of the TPSP licensing process at any stage without incurring any liability to the affected applicants or any obligations. Subject to the above, PTA shall issue TPSP License (s) to the successful applicant (s).
The Licensee shall deliver to the Authority an unconditional, irrevocable and continuing Performance Bond of Rs 10 million in the shape of Bank Guarantees from a local bank in Pakistan with credit rating of AA+ and above, or a foreign bank having credit rating of A1 and above, on a format acceptable to the Authority in respect of its minimum rollout.
Paid-up Capital Requirement
State Bank of Pakistan (SBP) set up a requirement of Rs 200 million for paid-up capital for Third Party Service Providers (TPS Ps) in March 2016.
The banking regulatory also made it mandatory for TPSPs to maintain at all times at least ten percent (10%) of the required capital or any other amount prescribed by SBP from time to time, as security deposit at the central bank.
Five percent (5%) of the security deposit will be kept in a non-remunerative current account with the SBP Banking Service Corporation Office and five percent (5%) in the form of Government securities to be kept under lien at the same department.
TPSPs will have to invest in additional millions on infrastructure besides fulfilling the paid-up requirements of the central bank as per regulations rolled out jointly by State Bank of Pakistan and Pakistan Telecommunication Authority (PTA) on Mobile Banking Interoperability 2016.
The complete IM could be viewed here.