Iranian PSPs Growing by Leaps and Bounds

Iranian payment service providers have been improving in terms of adhering to laws and regulations that would put them on a better footing among their global peers, announced Shaparak, the entity in charge of Iran's payment network on Saturday.

"According to the regulations of Shaparak and the Central Bank of Iran, eight rounds of thorough assessments were conducted for Iranian PSPs over four years [2013-17] whose result shows that the average index for PSPs' services and technical-security qualities has improved by 70% in the 2016-17 fiscal year," reads a statement on Shaparak's website.

The statement seeks to outline the payment network's methods of operations since a recent media report had questioned the role and effectiveness of Shaparak.

The company notes that as the "oversight arm of the central bank", it has been tasked by the policymaker to oversee the performance of member PSPs and help boost the quality and safety of services offered by the payment providers.

The company said it has a mandate to conduct periodical assessments of PSPs, a task it first performed in the fiscal 2013-14, one year after the company took charge of the national payment network.

"In the years after that, as the need for completing documentations and creating a more comprehensive assessment procedure was felt, a document encompassing the total requirements of CBI and Shaparak's network was devised and given to PSPs," the company said.

The document contains details in various fields of offering payment services, coupled with an assessment framework that consists of five major parts: operational indicators, technical requirements, executive requirements, information safety requirements and management cooperation.

The five major criteria contain 11 subcategories, namely requirements pertaining to observance of Payment Card Industry Data Security Standards, adherence to internal regulations, acceptance tools, operational processes, switch technical requirements, monitoring, data center, call center, management cooperation, switch accessibility and point of sale efficiency.

According to Shaparak's statistics, conformity to the aforementioned requirements was extremely poor at the time it took up the reins, but PSPs continued to significantly improve under its supervision and conformity ratio across nine requirements is now above 90%.

While management cooperation is currently at 100%, monitoring requirements stand at 89% while point of sale efficiency is at the lowest (65%), the payment network said.

The company changes the weight and importance of assessed items on an annual basis in accordance with their sensitivity and efficiency. The time of each of the two assessments per year is chosen at random while the chief executives of PSPs are presented with a thorough report on what they should improve and in what duration.

Shaparak has been conducting its second assessment of the current fiscal year from the beginning of the seventh Iranian month of Mehr (Sept. 23) and said it will be completed after four months by the end of Dey (Jan. 20, 2018).

"Shaparak has not moved to rate the PSPs so far but if required, it can do it after obtaining the permits from the central bank," it added.

Shaparak in Fiscal 2016-17

Shaparak processed more than 12.57 billion successful transactions during the previous fiscal year ending March 20, registering a 34% growth compared with the year before.

According to the company's annual report, the total value of payment transactions increased by 22.9% during the previous year to 13,830 quadrillion rials ($329.5 trillion).

POS terminals remained the most popular payment tool during the last Iranian year, accounting for 86.7% of total transactions. Mobile payment and online gateways followed by processing 10.6% and 2.6% respectively from a total of payment transactions.

According to Shaparak, more than 6.1 million POS terminals are active in Iran. Transactions worth 50,001 rials to 250,000 rials accounted for 36.2% of those made through POS terminals during the aforementioned period.

The overwhelming majority–80%–of all transactions through mobile gateways had a value of less than 50,000 rials. More than 63% of total online transactions were valued less than 250,000 rials, according to the released data.

Shaparak also recorded 1.4 billion failed transactions during the last fiscal year, 85% of which were caused by users. Card issuers accounted for 12% of total failed transactions, whereas network failure was the reason for 0.3% of failed payment transactions, the report indicates.