State Bank of Pakistan (SBP) has revoked the in-principle approval and pilot operations approval granted to fintech M/s. TAG Innovation Pvt. Ltd – referred to as TAG – to operate as an electronic money institution (EMI).
Fintech TAG, launched in 2020, has described itself as Pakistan’s first digital-native financial super app combining everyday banking services, instant P2P and online payments mechanism. Last year, TAG closed a $5.5million pre-seed round led by Quiet Capital and Liberty City Ventures valuing the company at $100million.
According to SBP – the Central Bank of Pakistan – its action is to protect the public after identifying violation of its regulatory requirements and other concerns during TAG’s pilot operations.
EMIs are entities that offer innovative, user-friendly and cost effective low value digital payment instruments like wallets, prepaid cards, and contactless payment instruments. The licences are issued by SBP to non-bank entities in three stages i.e. in-principle approval, pilot operations approval and commercial operations approval.
A pilot operation is conducted to assess the readiness of the business for commercial operations and only after its successful completion, licence to commence commercial operations is granted to the respective EMI.
TAG Innovation has been advised to close all customers’ wallets and remove its application from Google’s Play Store and Apple’s App Store and any other platform with immediate effect.
In August 2022, the SBP asked TAG to refund all outstanding funds to its wallet holders after spotting violations of regulatory requirements and ‘other concerns’. On 4 August, SBP requested TAG completed the refunds by 19 August.