Three commercial banks have sent applications to the Central Bank of Iran to start e-payment service providing companies.
The Middle East Bank, Shahr Bank and Karafarin Bank have officially submitted their requests and Ayandeh Bank has purchased the shares of Damavand Electronic Card Company, already licensed by the CBI, Ebinews website reported Tuesday.
Per CBI rules banks can establish PSP companies but must at least 51% of the shares of the proposed company. The minimum capital for starting a payment company is 10 trillion rials. Newcomers should have at least 500,000 active POS terminals.
The CBI deputy for innovative technologies, Mehran Mahramain, said earlier that four banks had applied for the payment companies. His comments were in response to the decision by the Competition Council asking the CBI to redefine its regulations and end banks’ monopoly in the growing e-payment market.
Twelve PSPs have operating license from the CBI. The central bank’s stringent regulations for setting up PSPs have so far disallowed the emergence of new players in the lucrative market.
"Following Fintech Association's complaint against the CBI for reportedly monopolizing the payment services market, the council ordered the CBI to remove regulatory hurdles for launching PSPs that have led to a [de facto] monopoly," Mehdi Fatemian, head of the Fintech Association, was quoted as saying.
The council's review attests to the fact that the central bank has issued no new license for PSPs except for 12 firms almost all owned by commercial banks.
The council has also urged the CBI to rethink its regulatory mechanism per which banks must own at least 51% of the shares of the payment service providers.
"As such, there is hardly any possibility for new companies not owned by banks to join the market but with huge investments, technological potential and state backing," the council said on its website.
"This is while, it is necessary for the e-payment market to improve and update with advanced technology to achieve such goals as expanding competition and creating the conditions wherein users have enough options for using payment services," the council said.
Responding to the council's position, the central bank denied any monopolization in the PSP market saying that new companies are in the pipeline.
According to Mahramian, the CBI has announced a new mechanism for licensing PSPs following a recent decision by the CBI executive board.
"There is no monopoly in the new measures.”
‘Lacking Eligibility’
According to the official, there is a platform for submitting applications for starting payment companies. "We have received several applications of which only four meet the eligibility criteria."
Mahramian provided no details about the platform nor the eligibility regulations.
There also was no explanation from the CBI as to why all the PSPs are owned by banks. "We first need to make clear whether the PSPs want to be owned by the banks or not," the official said.
Mahramian said revising the fee mechanism of payment services is on the CBI agenda. "We will soon announce the framework for revising the fee system."
Nilson Report, a prominent source of news and analysis of the global card and mobile payment industries, has ranked seven Iranian payment service providers among the ‘World Leading Merchant Acquirers’ in 2021.
"The largest merchant acquirers in the Middle East and Africa are in Iran albeit in the absence of Visa nor MasterCard. There were seven acquirers in Iran that processed more card payments than the largest Visa and MasterCard acquirer in the MEA region," the report said.
