Friday July 12, 2024

DCB crisis: Google changes payment mechanism to purchase apps

By Mehtab Haider
November 29, 2022

ISLAMABAD: Google on Monday announced that due to local requirements, users in Pakistan will be able to make Play Store purchases through credit or debit cards only with effect from December 1, 2022.

“Google Play is and will continue to remain available for all users in Pakistan. However, the availability of payment options may change over time. From December 1, 2022, due to local requirements, users in Pakistan will be able to make Play Store purchases through credit or debit card only, until other payment methods are made available”, a Google spokesperson stated in a statement issued on Monday. The State Bank of Pakistan had revoked Direct Carrier Billing (DCB) for Cellular Mobile Operators making the stuck-up outstanding amount stand at $34 million.

The Ministry of Information Technology & Telecom, Pakistan Telecommunication Authority (PTA), and four mobile operators have written a joint letter to the State Bank of Pakistan. In his letter to Minister for Finance Ishaq Dar, Minister for Information Technology and Telecom Syed Amin Ul Haque said that IT-related payments, including Mobile App purchases & subscription services, under S100,000, were authorized by the State Bank of Pakistan (SBP) through the designated commercial banks. However, in September 2022, SBP revoked the IT designation of banks for making IT-related payments on behalf of the Telecom Operator/Cellular Mobile Operators. “This revocation has restricted the telecom operators to paying global IT platforms like Google, YouTube, Meta and Spotify etc. for the operator-facilitated digital services and related customer payment process referred to as Direct Carrier Billing which is a standard mechanism offered by Cellular Mobile Operators (CMO) globally with sizeable tax value.”

The minister further said in the last year, mobile operators in Pakistan contributed around Rs 5.3 billion to the national exchequer while offering these services. It warned that “ all the major players like Google, Amazon, Meta, etc. are being impacted because of non-payment and are most likely to discontinue their services in Pakistan”.

“Recently, Google has issued notices to suspend the DCB services of mobile operators until all outstanding payments are cleared. The notices were issued to Jazz and Ufone (which are attached),” he stated and added their suspension may result in serious political chaos and adversely affect the country’s reputation for investment with negative consequences on the digital business, IT exports and e-learning with substantial loss to the national exchequer as well.

He requested the finance minister’s attention and support to withdraw the DCB revocation of IT designation of respective banks authorized for IT-related remittances on behalf of telecom operators and ensure timely pending payments to global digital platforms.

Meanwhile, the SBP in its statement said that during recent off-site reviews, it was observed that in addition to utilizing the mechanism to remit funds for IT-related services for their own use, Telcos were remitting the bulk of the funds for video gaming, entertainment content, etc. purchased by their customers using airtime, under DCB.

DCB is generally 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 these products through airtime and then remit funds abroad reflecting such transactions as payments for the acquisition of IT-related services.