TAG will be the latest fintech startup to get approved by the State Bank of Pakistan (SBP) to operate as an Electronic Money Institution (EMI) in Pakistan.
TAG is a mobile application that allows its users to open mobile wallets and get debit cards. The app’s users can use it to perform online transactions such as money transfers, bill payments and mobile top-up payments with a touch.
This Islamabad-based startup was founded by Talal Ahmad Gondal, Ahsan Khan, and Alexander Lukianchuk and has also received an undisclosed amount of pre-seed investment from regional and international investors including former executives of N26 and Revolut.
In a press release issued on Monday, the company stated that TAG will begin its pilot operations under SBP regulations over the next few months.
According to Talal Ahmed Gondal, Tag’s CEO, “Pakistan is headed for an exponential increase in digital payments in the coming years. The seamless digital payments offered by innovative fintech like TAG will power the country’s growth as well as financial inclusion.”
SBP introduced its EMI regulations last year in April. In light of these new regulations in-principle approval is required to operate as an EMI in Pakistan. Other Pakistani startups like Sadapay, Finja, Nayapay and Wemsol have already received SBP approval.
The SBP EMI regulations hope to achieve five key objectives:
- Provide a regulatory framework for EMIs looking to offer innovative payment services to the general public;
- Prescribe minimum service standards and requirements for them to ensure delivery of payment services in a safe, sound and cost-effective manner;
- Outline the permissible activities that can be carried out by an EMI and its agents’ network;
- Provide a baseline for the protection of EMI’s customers;
- Achieve the SBP’s goal of digital payments and financial inclusion.
With the COVID-19 pandemic and the subsequent lockdown impacting businesses and their customers all across the country, Pakistan witnessed an increase in its average daily interbank fund transfers. They increased to about 357,000, reaching a peak of almost 700,000 in May as compared to 188,000 before the lockdown.
As the country increasingly shifts towards digital payments, innovative fintech startups like TAG have a huge opportunity to grow and benefit from these changing trends.