SBP denies holding payments to Google

KARACHI: State Bank of Pakistan (SBP) on Saturday rejected media reports that certain payments to Google were stuck at the central bank.

“The fact is that in order to facilitate the domestic entities, the SBP specified certain Information Technology (IT) related services, which such entities can acquire from abroad for their own use and make foreign exchange payments there against up to USD 100,000 per invoice. Such services include, Satellite Transponder, International Bandwidth/ Internet/ Private Line Services, Software License/ Maintenance/ Support, and service to use electronic media and databases,” the statement said.

Entities desirous of utilising this option designate a bank, which is approved by the SBP one time. Subsequently, after designation, such payments can be processed through the designated bank, without any further regulatory approval, it said.

However, during recent off-site reviews, it was observed that in addition to utilising the aforesaid mechanism to remit funds for IT related services for their own use, telcos were remitting bulk of the funds for video gaming, entertainment content, etc. purchased by their customers using airtime, under Direct Carrier Billing (DCB). DCB is, in general, an online mobile payment method, which allows users to make purchases by charging payments to their mobile phone carrier bill. The telcos were allowing their customers to purchase above mentioned products through airtime and then remitting funds abroad reflecting such transactions as payments for acquisition of IT related services.

Thus, in effect the telcos were acting as intermediaries/ payment aggregators by facilitating acquisition of services by their subscribers.

Therefore, in view of the violation of foreign exchange regulations, the SBP revoked the designation of banks of telcos for such payments. However, to facilitate their legitimate IT related payments, the telcos have been advised through their banks to resubmit their requests, the SBP said.

If any entity, including a telco, intends to operate as an intermediary/ payment aggregator and such arrangement involves outflow of foreign exchange, it has to approach the SBP separately through its bank for seeking special permission for providing such services under the Foreign Exchange Regulation Act 1947.

Separately, federal Information Technology and Telecommunication Minister Syed Aminul Haque also termed reports untrue that Google would suspend all Play Store services from the start of the next month because of the central bank’s move to block $34 million in payments to international service providers such as Google through direct carrier billing (DCB) mechanism.

According to local media, the minister stated that services of the free Google applications will continue to available to the users in Pakistan, adding that SBP’s decision to block the payments to international providers will affect only those who want to download the paid applications.

He said that the IT ministry has decided to write a letter to the Ministry of Finance to take up the matter.

Haque said that suspending the payments to the international service providers will damage the Pakistan’s repute and also create difficulties for people using the paid applications.

Furthermore, users can buy the paid apps despite revocation of the DCB mechanism through bank cards.

It further suggests that a large number of mobile users will not be able to download Apps from Google Play Store due to limited credit card facilities for a certain customers.