SBP says online funds transfer charges to ensure ‘sustainable supply of digital transactions’

After receiving backlash for allowing banks to charge money for online fund transfers, the State Bank of Pakistan (SBP) has said that the decision will ensure ‘sustainable supply of digital transactions.’

The SBP, in a series of tweets, said that 80% of IBFT transactions are below the amount of Rs25,000 in a month so for most people the service will still be free. “IBFT does not include utility bill payments. It is not a tax but a fee that is charged to cover the cost of providing services,” it added.

The central bank said that the objective of this decision is to ensure sustainable supply of digital services by fintechs and banks without discouraging digital transactions by the majority of public.

Days ago, Deputy Governor SBP Sima Kamil said that the country's banks have now been brought into a regulated structure of charging customers for online fund transfer services, calling it a "price-control" mechanism as situation around Covid-19 had eased in the country.

Kamil, ex-president of United Bank Limited and former director of the First Microfinance Bank, said that before the pandemic, banks and MFBs used to charge Rs100 to Rs400 per transaction for money transfers.

“Banks are no more independent to charge whatever they want. There is a price control to it," added Kamil, who was appointed as SBP's deputy governor by the government in August, 2020 for a period of three years.

Online fund transfers: SBP deputy governor says banks now under price control

Background

Earlier last week, the SBP issued the circular on online fund transfer services.

"It has now been decided that banks/MFBs/EMIs shall continue to provide free of cost IBFT services to their individual customers up to, at least, a minimum aggregate sending limit of Rs25,000 per month per account/wallet," stated the circular. "Hence, individual customers of Banks/MFBs/EMIs shall continue to send out as many free IBFT transactions as long as they remain within their monthly limit of Rs25,000.

"After the monthly limit of Rs25,000 is exhausted, banks/MFBs/EMIs may charge their individual customers, a transaction fee of 0.1% of the transaction amount or Rs.200, whichever is lower. However, Banks/MFBs/EMIs are encouraged to provide free of cost IBFT services to their customers to promote adoption of digital payments in the country."

The central bank also clarified that all intra-bank fund transfers as well as incoming interbank fund transfer services shall remain free of charge.

Additionally, the SBP directed banks to ensure proper disclosure of charged and free IBFT amounts along with applicable fees to their customers by sending regular notifications through SMS, apps and email. "After every digital transaction, the customer shall receive free of charge SMS on their registered mobile numbers intimating them about the transaction amount and the charges being recovered.

"The above instructions shall come into effect from July 01, 2021."

It also advised banks, MFBs and EMIs to not limit the number of fund transfer transactions on their customer accounts/wallets "unless there are genuine concerns related to anti-money laundering/combating the financing of terrorism or frauds."

The SBP also said the move is aimed at enabling service providers to recover part of the costs they incur on providing inter-bank fund transfer service while they build sustainable and innovative business models.