Eliminating the army of regulating bodies and recommending a unified regulator for the fintech industry was the main topic at FinTechs and Regulatory panel held at the FINSTARS event on Wednesday.
The forum – held as part of the FINEX 2016 – offered 50-plus innovators in the field the opportunity to get help directly from mentors and venture capital representatives.
The Central Bank of Iran, the Task Force for Defining Illegal Activities in cyberspace, Shaparak–the payment industry’s regulator–and the judiciary have been named by the media as decision-making bodies in the massive e-payment industry.
Lack of appropriate regulations has been a concern for both regulators and start-ups. The issue got added attention after a large group of non-bank payment services got blocked in late March, when transactions peak for the annual Nowruz (new year) shopping season.
These services allow sellers to quickly launch a payment gateway on their website, without getting involved in the demanding process imposed by banks and other Payment Service Providers.
The move is estimated to have killed 1,000 jobs which relied on non-bank payment services for running their businesses.
Reports suggest that the E-Commerce Development Center had blocked the payment websites for allegedly being used as money laundering channels. This is while all the transactions are finally processed by the CBI's Shaparak network.
Noushin Momen Kashani, representing the E-Commerce Development Center at the event, denied that her company had any role in blocking the payment services. “The final decision was made by other organizations.”
“We are tasked to promote e-commerce, therefore we asked various players to work together and develop a set of regulation for operation of fintech startups,” she said. “Startups should also take part of the responsibility [in self-regulation].”
“A rulebook has been developed and will be unveiled within two months,” she added.
Mostafa Amiri, founder of ZarinPal, a major payment service which also saw a temporary ban, called on the regulator to consider points put forward by fintech startups. “Officials are right in their concerns about the identity of payers and receivers, but how should a person like me know what is the criterion for illegal transactions.”
He went on to say that “We have created some channels for supervisory bodies so that they could have their sights on the transactions."
“Startups need to grow, they should not get blocked,” Amiri said and called on the CBI and Shaparak to take the responsibility for fintech regulations, “since startup operations are mostly focused on payment.”
PSP Stance
Saeed Ahmadi Pouya, director of Shaparak’s planning and development department, denied Payment Service Providers involvement in the payment startups’ blocking process, noting that [licensed] PSPs are interested in collaborating with fintech companies.
For now 12 PSPs are authorized to operate in the payment industry, mostly affiliated to the banks. CBI’s strict regulations for establishment of a PSP have prevented the emergence of new players in the market.
Setting the Bar Higher
Participating startup services show that they are fully aware of international trends and domestic users’ needs–facts often ignored by PSPs and banks.
Drupz, for instance, helps users save money by helping them manage their expenses. Nivo lets users put their income and expenses into various categories and have access to it in a cloud-based platform.
MyCredit offers virtual credit cards to employees, allowing them to purchase from member shops through mobile applications. KifPay, an e-wallet, provides shopkeepers with a platform for managing customers' credit.
Insurance Technology
Esure is a multi-purpose platform. Users can calculate the cost of various categories of insurance policies. They also have a chance to make money by referring new customers. Bidbarg allows users to get a price quote from all the insurance companies. It has also been an active body in training the public, by answering every question asked by the users about key notions of insurance policies and regulations.
Many insurance experts have emphasized the need for promoting the insurance industry among the public. Informing and educating the public is said to be a useful measure to curb fraud in the industry.
The CBI, as the main regulator of financial markets, is the only body capable of helping with fintech startup growth. Banks and PSPs, however interested they might seem, are not reliable partners for innovators. The central bank can be trusted to prioritize national interest without having a vested interest to help boost innovative financial services.
It should also be noted that fintech startups will pave the way for the growth of new businesses in other sectors, since payment is a vital component of every new business.
