MONITORING DESK
ISLAMABAD: Concerned about the telecom operators’ worries over the payment blockage to Google, Federal Information Technology and Telecommunications Minister Aminul Haque has said that he has submitted a letter to Finance Minister Ishaq Dar expressing doubts about the issue.
In a statement, Haque said that a few days ago, all telecom operators wrote to his ministry to express their concerns about the State Bank of Pakistan (SBP) blocking user payments to Google. He went on to say that because of the seriousness of the situation, all stakeholders were consulted, and it was decided to convey these concerns to the finance minister via letter. “The telecom sector is already in trouble, and such decisions would worsen the situation,” he said.
The minister clarified that payment blocking would only result in the suspension of paid Google Play applications. “The free applications will continue to function,” he said. However, Haque cautioned that refusing to pay international companies could harm the country’s reputation. He went on to say that users who used paid applications might have a difficult time.
Haque demanded that Dar take immediate action and direct the SBP to lift the ban on Google payments via mobile phones. “It is critical that the IT and telecom ministry is taken into account when making such decisions in the future,” the minister was quoted as saying in the statement.
Users in Pakistan won’t be able to access Google Play Store services after December 1 due to the central bank’s suspension of the direct carrier billing (DCB) system.
The apps would be available for download, but the only methods of payment accepted would be debit and credit cards. The DCB, which entails payment using a mobile balance, is the additional option for such payments.
Due to a lack of international digital payment options for using different apps, the DCB was created.
“It is crucial to add here that we all realise the current difficulty of the country’s worsening economic situation and hence are willing to cooperate amicably with the Regulator (SBP) as we currently do in relation to import-related transactions involving the telecom industry, according to a letter the telecom operators sent to the SBP.
The central bank, on the other hand, has rejected claims that certain payments to Google were held up at the SBP, calling them “baseless” and “misleading.”
“All such claims are categorically denied by the SBP. The fact is that in order to assist domestic entities, the SBP specified specific information technology-related services that these entities may purchase from abroad for their own use and make foreign exchange payments there against up to $100,000 per invoice. In a statement, the central bank listed these services, which also include satellite transponder, international bandwidth/internet/private line, software license/maintenance/support, and service to use electronic media and databases.
The central bank further stated that the organisations interested in using this option designated a bank that had previously received SBP approval. As a result, following the designation, such payments could be processed through the designated bank without requiring further regulatory approval.
However, it went on to say that recent off-site reviews had revealed that telcos were also using the aforementioned mechanism to transfer funds for IT-related services for their own use, in addition to doing so under DCB for video games, entertainment content, and other items that their customers had purchased with airtime.
The telcos were allowing their customers to buy the aforementioned products using airtime, and they were then sending money abroad to show that these transactions were payments for IT-related services. As a result, the telcos effectively served as intermediaries or payment aggregators by making it easier for their subscribers to purchase services, it continued.
The SBP consequently revoked the designation of banks and telcos for such payments, according to the central bank, due to the violation of foreign exchange regulations. However, telcos have been instructed by their banks to resubmit their requests in order to facilitate their legitimate IT-related payments.
According to the statement, “If any entity, including a telco, intends to operate as an intermediary or payment aggregator and such arrangement involves the outflow of foreign exchange, it must approach [the] SBP, separately through its bank, for seeking special permission for providing such services under the Foreign Exchange Regulation Act, 1947.”
A link to the instructions for purchasing IT and other services from abroad can be found at https://www.sbp.org.pk/fe manual/pdf/2020/Chp-14.pdf, it was added.
Pakistan owes $34 million to international service providers in unpaid invoices, which is having an effect on tech giants like Google, Amazon, and Meta, who may be forced to stop providing their services entirely.
