Pakistan’s central lender on Friday revoked the in-theory and pilot functions approval of Tag to function as an electronic cash establishment in a move that poses existential danger to the agency.
State Bank of Pakistan explained in an purchase that it is revoking Tag’s acceptance to function as an electronic money institution, the permission that is expected for entities to offer you modern, person-helpful and expense helpful lower-worth digital payments instruments these types of as wallets, playing cards and contactless payments. The central bank has also purchased the startup to shut all customers’ wallet accounts and pull its applications from the app suppliers with immediate impact.
The central bank’s motion is in reaction to Tag violating regulatory prerequisites and “other concerns” that emerged through the pilot operations of the firm, it mentioned. The determination has been taken to “protect the fascination of the public at significant,” it included.
The regulatory motion follows a months-long probe into Tag, which presents banking and fiscal providers these as contactless payment, cards and wallets to buyers in Pakistan.
The startup has been accused of forging files to the central bank, in accordance to an previously investor letter obtained by TechCrunch. The central financial institution requested Tag in August to “immediately” refund all funds of customers.
Tag is just one of the speediest rising startups in Pakistan. It was valued at $100 million in its seed financing round in September final yr. The startup counts Liberty City Ventures, Canaan Partners, Y Combinator, Addition and Mantis amongst its backers.
The Point out Financial institution of Pakistan did not immediately answer to a ask for for remark through telephone and email.
Friday’s motion is a different blow to the nascent but fast expanding startup ecosystem in Pakistan, which clocked record funding past 12 months. Airlift, as soon as the most valuable startup in the South Asian industry, shut down in July this calendar year right after it unsuccessful to protected fresh new funding.
Tag’s main govt could not be immediately arrived at for remark. The startup will check out captivating the State Bank’s choice, a supply with direct expertise of the issue explained to TechCrunch.