State Bank Of Pakistan (SBP) Rebuked Banks For Deliberate Attempts To Prevent Customers From Getting Domestic Payment Scheme (DPS).

By Taimoor Hassan

The State Bank Of Pakistan (SBP) On Saturday Rebuked Banks For Their Deliberate Attempts To Prevent Customers From Getting Domestic Payment Scheme (DPS) Paypak Cards. In an email sent to heads of financial institutions on Saturday, the SBP said, “It has been noted with serious concern that card-issuing institutions are deliberately flouting SBP instructions and are forcing customers to adopt international payment scheme cards (IPS) even in cases when a customer does not express a genuine need or a specific request for an international payment scheme card.”

The message further reads, “Therefore, it is reiterated that card issuing banks shall immediately refrain from circumventing SBP instructions by promoting international payment scheme cards and forcing customers into opting for such cards.”

In a report published last week, Profit highlighted the deliberate attempts of commercial banks to keep their customers from getting PayPak debit cards despite the regulator’s directives to promote DPS card as the priority debit card. According to the report, bank representatives actively engage in keeping customers from getting PayPak cards and promote IPS cards Visa, Mastercard and UnionPay as priority cards.

Profit’s report had further highlighted that commercial banks had increased charges on PayPak cards, in addition to keeping features like ATM withdrawal limits lower for PayPak cards and higher for IPS cards. Higher charges on PayPak cards are also against SBP’s fair pricing policy.

PayPak was introduced as the domestic scheme card in April 2016, as a low cost alternative to IPS cards. DPS serves the central bank’s objectives of banking the unbanked population of the country and erecting Pakistan’s payment ecosystem on a local scheme instead of relying on IPS in case of any external contingency that leads to IPS cards stopping to work in Pakistan.

Since its inception, banks did not actively push PayPak cards into the market and offered it only to low-tier accounts. On January 31, 2020, the SBP directed card issuing institutions, among other things, to offer PayPak as the default card at the time of issuance or renewal of debit cards for all accounts. Accordingly, the central bank directed that any card requesting customers shall be offered either an exclusive PayPak card or a domestic scheme card co-badged with an international payment scheme.

The SBP had directed that an exclusive IPS card like Visa, Mastercard or UnionPay card, should be given upon written request of the customer. The central bank reiterated again that card-issuing banks shall offer domestic payment scheme card as the priority debit card and an IPS card should be furnished to the customer upon his written request.

Moreover, the SBP has directed financial institutions to inform customers about the risks of international schemes’ card usage and benefits of the domestic scheme. “SBP will keep monitoring compliance of the above instructions, in letter and spirit, and shall initiate regulatory enforcement actions against delinquent banks,” the email sent to financial institutions further read.

This news was originally published at Pakistan Today.