EMI – Electronic Money Institutions
\nEMI or Electronic Money Institution means a non-banking entity duly authorized by State Bank of Pakistan to issue means of payments in the form of electronic money. Electronic Money Institutions are entities that offer innovative, user-friendly and cost-effective low value digital payment wallets, prepaid cards, contactless payment instruments and wearables etc. for promoting cashless payments like merchant checkouts, e-commerce, transportation and toll payments etc.
\nElectronic Money or E-money is defined in law as monetary value stored on an electronic device or payment instrument issued on receipt of funds and accepted as means of payment by the undertaker other than an issuer. E-money includes electronic store of monetary value on an electronic device that may be used for making payments or as may be prescribed by the State Bank of Pakistan (\u201cSBP\u201d).
\nIn the year 2019 the SBP fostered innovation in payment industry with an objective to promote digital payments. Regulatory framework to non-banking entities were provided for Electronic Money Institutions (the \u201cEMIs\u201d or \u201cEMI\u201d) under the powers conferred on it by Payment Systems and Electronic Fund Transfers Act, 2007 in order to offer interoperable and secure digital payment services to end users.
\nActivities of EMIs
\nE-money platforms shall only be used for permissible activities. The EMIs in Pakistan may engage in the following activities:
\na)\tIssue e-money payment instruments.
\nb)\tDistribute e-money payment instruments.
\nc)\tRedeem e-money payment instruments.
\nd)\tAcquire payment instruments of other EMIs and banks\/microfinance banks.
\ne)\tMultilateral routing, switching and\/or processing of payment transactions.
\nf)\tAny other activity permitted by SBP.
\nE-money shall be used to make payment services i.e. payments for goods and services, bill payments, fund transfers and cash deposits and withdrawals from e-money accounts. Electronic Money Institutions shall not conduct the business of banking including the acceptance of funds from public for the purpose of lending, investments other than that provided in EMI regulations or any speculative activity.
\nEvery Electronic Money Institution shall take approval from SBP before offering cross-border e-money products\/services. EMIs shall neither pay interest\/returns to customers nor offer anything that adds to the monetary value of e-money, however, EMI may offer discounts etc. on goods and services provided such discounts are not linked to the amount or length of time e-money is held by the customer.
\nTHE EMI shall not issue e-money payment instruments at a discount i.e. issue e-money payment instruments that has a monetary value greater than the funds received from customers. The existing payment system operators or payment system providers authorized under the relevant rules who intend to function as an EMI may upgrade their respective authorization to EMI license after fulfilling necessary conditions laid down in these Regulations. The SBP may require such payment system operators or payment system providers to establish a subsidiary\/separate entity for the purposes of EMI business. <\/p>\n
Read Also
\nLicense Procedure and Conditions for EMI
\nLicense Stages for EMI
\nPayment Systems and Electronic Funds Transfer Act, 2007
\nRegulations for Electronic Money Institutions
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