SBP issues rules for Digital On-boarding of Merchants for Electronic Money Institutions

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SBP issues rules for Digital On-boarding of Merchants for Electronic Money Institutions

State Bank of Pakistan Monetary Policy November 2019

Stat Bank of Pakistan on Friday, issued Rules for Digital Onboarding of Merchants for Electronic Money Institutions (EMIs) so as to facilitate the growth of digital payment acceptance points in the country.

The Rules provide the minimum requirements for the simplified due diligence process of onboarding individual and self-employed persons as Retailers, merchants, services to be offered by these merchants, transaction limits, maximum account balance limits, security measures, dispute resolution mechanism and reporting of data to SBP.

SBP says that the Rules intend to facilitate the EMIs to include small retailers/merchants and enable them to accept their payments digitally, thus giving a new payment option to the consumers and widening the financial inclusion base in Pakistan.

As per SBP, Most of the Electronic Money Institutions intend to target smaller merchants to enable them to accept payments digitally by deploying low-cost, technology-enabled payment methods like QR codes.

Salient Features of the Policy are mentioned below:

  • Digital merchant shall include small businesses or individuals providing legitimate goods and services like transport, home deliveries, small grocery, and kiryana stores
  • Merchants to be given digital payment acceptance channels like POS machines, m-POS, QR code, mobile payment applications, direct credit transfers, e-commerce gateways
  • Account activation requires KYC/CDD from the bank, CNIC, Photo, Biometric, Call Back Confirmation
  • Transaction limits through digital payments are Rs. 500,000 per month after Biometric Verification each for Debit and Credit. While the same is the Account Balance Limit
  • The guidelines instruct EMI’s to ensure the security of the mobile application, web-portals, and digital channels
    for onboarding merchants and  adopt international best practices on payment instruments and
    payment channel security standards such as Payment Card Industry Data Security Standard (PCIDSS) and Payment Application Data Security Standard (PA-DSS)
  • EMI’s are asked to adopt two-factor authentication mechanism on transactions of above Rs. 5,000/- initiated from the accounts
  • EMI’s are instructed to monitor Merchant Account transactions via Automated Transaction Monitoring System and to report any suspicious transaction to the Financial Monitoring Unit (FMU)

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