The State Bank of Pakistan (SBP) has scrapped the statutory minimum fee of 1.5% that banks were charging merchants on financial transactions made with debit and credit cards and has authorized financial institutions to charge even less than 1.5% in order to encourage digital banking.
According to a statement released on Friday, the central bank has kept the maximum charge cap at 2.5%.
Moreover, the SBP mandated that all e-commerce players and online payment receivers in Pakistan begin taking card payments by June 30, 2023.
Previously, gas outlets had stopped accepting debit and credit card payments and asked that the 1.5% fee be eliminated.
Moreover, petroleum product dealers and oil marketing organisations (OMCs) such as Pakistan State Oil (PSO) requested approval from the relevant authorities to recover the additional amount from cardholders in order to protect their profit margins. Nevertheless, the request was denied by the authorities.
"The lower range (minimum charge) of the merchant discount rate (MDR), ie 1.5%, is abolished...to promote the acceptance of card-based payments," according to the SBP statement.
"By June 30, 2023, all e-commerce/online payment acquirers operating in Pakistan must accept domestic payment scheme (DPS) cards for card-not-present (CNP) transactions on their respective payment gateways."
He said that retailers preferred to take cash rather than cards or online payments because the transaction charge was paid by them rather than by debit and credit card customers.
"It (the elimination of the minimum charge) is a good thing for digital transactions. This is part of the State Bank's digital card adoption plan."
He emphasised that the move will assist eliminate cash-based transactions and simplify economic recordkeeping.
The country has over 45 million debit and credit cards. Nonetheless, the vast majority of users use their cards to withdraw money from ATMs. "Just around 5-10% utilise cards at POS."
For the quarter ending March 2022, 38.3 million POS transactions totaling Rs189.7 billion were handled, representing a 21.9% increase in volume and a 6.5% increase in value.
A total of 9.1 million e-commerce transactions worth Rs27 billion were performed digitally, representing a 1.3% increase in value but a 32.7% decrease in volume.
Also, the number of ATMs climbed by 1.1% over the previous quarter. The total value of ATM transactions was Rs2,437 billion.
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