The Central Bank of Iran seems unsatisfied with the current electronic wallet services offered by banks and payment service providers and has warned them to revise their regulations that so far have been in favor of lenders and PSPs.
A year after announcing rules for electronic wallet services to bank customers, the CBI deputy for innovative technologies expressed disappointment over the current state of e-wallets.
In a meeting with representatives of banks and PSPs, companies, Mehran Moharramian said, "Banks and PSPs can and should play an effective role in promoting e-wallets. However, if they continue to procrastinate the CBI will revise its regulations, and this can result in the entry of new players controlling the market."
A digital wallet (or e-wallet) is a software-based system that securely stores users' payment information and passwords for payment methods and websites.
The Money and Credit Council, the top monetary decision-making body, in September unveiled a regulatory framework for fintechs dealing with electronic wallets to help facilitate micropayments.
Defining a framework for the operation of electronic wallets, as a part of a plan to regulate fintech startups, has long been on the CBI agenda. Earlier it had said startups offering electronic wallet services need to incorporate an authorized bank or credit institution into their operations.
It has been stressed that this does not mean banks are allowed to interfere in the business of fintechs and will only act as a body tasked with storing and safeguarding money entrusted to the wallets.
CBI officials say the involvement of financial institutions could remove existing legal hurdles in the way of fintechs offering electronic wallet services.
Moharramian noted that now is the best time to start offering e-wallets, as "the CBI has preferred not to set fees for e-wallet services in order to help foster competition among players.”
As per rules, providers of e-wallet services are required to inform customers about transaction fees. Banks and e-wallets are free to set fees in accord with their business plans and customer needs.
"The central bank can revise [reverse] its decision and ask service providers to charge specific fees," he added.
Regarding the framework of e-wallet operations, the CBI has stressed that startups “must not focus on raising deposits” because then they will be in breach of their legal framework and be seen as interfering in the work of banks and credit institutions. The business of electronic wallets should focus only on fees.
CBI rules say using electronic wallets should not lead to money creation or expand money supply and uphold CBI technical requirements.
Users can increase or reduce funds in the wallets, make payments, ask for refunds or transfer funds to other e-wallets. One individual can own a maximum of three e-wallets.
