Central Bank to Finalize Fintech Regulations

In light of the importance of regulating fintech firms to prevent any problem in the monetary market, the Center for E-Commerce Development's deputy has announced that the Central Bank of Iran will define the framework of fintech operations by the end of summer.

"CBI is the only regulator of financial markets in the country, but the regulations that the bank is devising will be in line with the directive approved by the Supervisory Committee for Online Businesses," Faranak Oskouei also said in a national television broadcast on Friday.

Back in December, the Center for E-Commerce Development announced that it would regulate the operation of unofficial payment tools, referred to as aggregators, after profiling owners and users.

The framework requires users to provide a phone number (owned by the business) for being allowed to use the payment services. The measure has been repeatedly criticized for neglecting issues concerning the operation of startups.

However, Nasser Hakimi, the director of CBI’s IT Department, announced in March that the framework developed by the e-commerce authority is not approved by the central bank and it takes at least three months for CBI to set the redlines of fintech operations.

According to CBI regulations, innovative financial services are allowed to operate as long as they are not involved in money creation, currency exchange and offering payment tools (like cards) and attract deposits.

The Center for E-Commerce Development's deputy elaborated on the operations of online businesses, which need a payment gateway to sell goods and services online.

"After an online business obtains e-namad (a local online trust logo for e-shops), some of them directly approach payment system providers–a majority of which are affiliated with banks–for a payment gateway while others use payment aggregators as mediators in online payments," Oskouei said.

Payment aggregators allow sellers to quickly launch a payment gateway on their website, without getting involved in the demanding process imposed by banks and other PSPs.

Oskouei noted that some 25,000 online businesses have acquired their payment gateway from PSPs, but nothing has been done regarding those that use payment aggregators.

"There are no exact numbers for online shops using payment aggregators but they are estimated to be between 100,000 and 300,000," she added.

According to Oskouei, currently 50 fintech firms have announced their commitment to continue their operations until CBI regulations are ready for implementation.

"About two months ago, the Center for E-Commerce Development started registering fintech firms and their affiliated online shops, but the plan was not welcomed and only 15 firms have registered so far," she said.

Milad Jahandar, secretary of Fintech A (an association of Iranian fintech firms), also spoke in the Friday night TV report and said the current regulations of payment services cannot be implemented and gave fintech firms cold feet.

"Regulations ask for the website address of all customers while many of them do not have one," he explained.

Jahandar noted that according to Article 4 of e-commerce center's bylaw, there should be three representatives from the sector for devising these regulations while no one from fintech firms has participated in the process.