Published on November 19th, 2009 | by Arsalan Mir4
PTA & SBP To Formulate Third Party Mobile Banking Regulations
A guest post by Ammar Faheem earlier on how the telecom companies pose a challenge to the traditional banking industry in the mobile domain. It discussed how a Telecom-led model can be a threat to Bank-Led model. The news of ‘Third Party Mobile Banking Regulations’ is welcoming as it offers an intermediary model for opting the mobile banking services taking in account the concerns and responsibilities of both the financial institues and telecos. This will be a win-win situation for both. A recent example of this comes from Telenor and Tameer Microfinance Bank with ‘easypaisa‘.
The following PTA press release has more details about regulation formulation.
Pakistan Telecommunication Authority (PTA) and State Bank of Pakistan (SBP) have agreed to formulate “Third Party Mobile Banking Regulations”. A significant development in this respect incurred today when Chairman PTA Dr. Mohammed Yaseen met Governor SBP Syed Salim Raza at State Bank of Pakistan, Karachi. Heads of the two regulators discussed the proposed Regulations originally drafted by PTA and announced a “Joint Regulatory Committee” consisting of officials from the State Bank and PTA which will work on the draft regulations, finalizing its suggestions and recommendations within three months timeframe.
The draft of the Regulations addresses the ongoing debate over different models of providing mobile banking services which include ‘Telecom-led model’ and ‘Bank-led model. The proposed “Third Party Mobile Banking Regulations” offer an intermediary model for opting the mobile banking services taking in account the concern and responsibilities of both financial institutes and mobile operators.
During the discussion, Chairman PTA said that the mobile phone communication sector has shown an enormous growth in Pakistan; thus creating striking opportunities for service providers and consumers to utilize mobile networks for carrying out various daily life tasks such as financial transactions. He also highlighted salient features of draft regulations including operators’ obligations, arrangements between operators and financial institutes and Dispute Settlement Mechanism. PTA has been thoroughly working with State Bank on drafting a sound regulatory framework in order to facilitate potential stakeholders interested in introducing true mobile banking services in the country. The primary objective of this collaboration is to develop a unified regulatory framework, since mobile banking engrosses both financial institutes and mobile phone operators.
Governor State Bank appreciated this initiative by PTA and considered it an important development for the banking and telecom sectors of the country. He said that advancements in telecom technologies have positively affected other sectors and innovative products have been introduced. He said that customers of mobile operators and financial institutions will be benefited from Mobile Banking Services and these regulations will ensure their security and satisfaction.
At the end of the meeting during a joint statement, both regulatory heads endorsed the proposed “Third Party Mobile Banking Regulations” and aimed to continue mutual coordination for setting up a fair and non-discriminatory regulatory framework for the mobile banking service providers.
It may be mentioned that Mobile Banking is increasingly being employed by financial institutes in collaboration with mobile operators around the world to generate additional revenues, reduce costs or to increase customer satisfaction, often with very promising results. There is no universal form of m-banking; rather, purposes and structures vary from country to country. The systems offer a variety of financial functions, including micro-payments to merchants, bill-payments to utilities, Person-to-Person (P2P) transfers between individuals, and long-distance remittances. Currently, different institutional and business models deliver these systems.