- Decision taken after central bank identified violation of regulatory requirements during pilot operations
The State Bank of Pakistan (SBP) on Friday revoked the in-principle and pilot operations approvals granted to TAG Innovation to operate as an Electronic Money Institution (EMI) with immediate effect as per the applicable laws. The decision was taken after the SBP identified violation of regulatory requirements in the company during pilot operations, it said in a statement.
“SBP has taken this decision to protect the interest of public at large after identifying violation of its regulatory requirements and other concerns during the pilot operations of the company,” it said.
“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 SBP also advised TAG to close all customers’ wallets and to remove the mobile application from Google’s Play Store and Apple’s App Store and any other platform with immediate effect.
On August 04, 2022, SBP had informed the public about the regulatory action taken against TAG and also advised the firm to refund all outstanding funds to its wallet holders latest by August 19, 2022.
EMI licenses are issued by SBP to non-bank entities in three stages i.e. in-principle approval, pilot operations approval and commercial operations approval.
Moreover, pilot operation is conducted to assess the readiness of the business for commercial operations and only after its successful completion, license to commence commercial operations is granted to the respective EMI, the SBP said.
In September 2021, TAG Innovation received $12 million from international investors to enhance its digital payments business in the country.
The funding was led by Liberty City and also included Addition LP, Mantis Venture Capital and Banana Capital LP.
Previous investors in the pre-seed round were Quiet Capital, Fatima Gobi Ventures. Polymath Digital doubled down in this round while Khwarizmi Ventures and the co-founder of Plaid William Hockey also participated, added the report.
The funding put the company at a valuation of $100 million.
TAG is a mobile application that allows its users to open mobile wallets and get debit cards. The app’s users can use it to perform online transactions such as money transfers, bill payments, and mobile top-up payments with a touch.