SBP issues clarification on holding payments to Google

The State Bank of Pakistan (SBP) has dismissed “baseless and misleading” media reports that it had withheld payments to Google.

The SBP statement comes after news reports had been circulating in different sections of media that Google Play Store services will no longer be available to Pakistani users from next month as the SBP had suspended the direct carrier billing (DCB) mechanism.

The Pakistan Telecom Authority (PTA), the Service of Data Innovation and Telecom, and four cell versatile administrators (CMOs) consistently composed a joint letter to the SBP requesting that it rethink its choice to renounce the DCB system for the installment of the dollar charge considering the country’s ongoing liquidity emergency.

In a statement issued on Saturday, the central bank said: “The fact is that in order to facilitate the domestic entities, the SBP specified certain Information Technology (IT) related services, which such entities can acquire from abroad for their own use and make foreign exchange payments there against up to USD 100,000 per invoice. Such services include, Satellite Transponder, International Bandwidth/ Internet/ Private Line Services, Software License/ Maintenance/ Support, and service to use electronic media and databases.”

1/2 Recent news in some sections of media about stopping certain payments to Google by #SBP, are baseless and misleading. SBP strongly refutes all such assertions. See PR: https://t.co/OOnQBrQVoX pic.twitter.com/Rx11bobDLB

— SBP (@StateBank_Pak) November 26, 2022

Entities desirous of utilising this option designate a bank, which is approved by the SBP one time. Subsequently, after designation, such payments can be processed through the designated bank, without any further regulatory approval, it said.

However, during recent off-site reviews, it was observed that in addition to utilising the aforesaid mechanism to remit funds for IT related services for their own use, telcos were remitting bulk of the funds for video gaming, entertainment content, etc. purchased by their customers using airtime, under Direct Carrier Billing (DCB). DCB is, in general, an online mobile payment method, which allows users to make purchases by charging payments to their mobile phone carrier bill.

It said that the Telcos were allowing their customers to purchase above mentioned products through airtime and then remitting funds abroad reflecting such transactions as payments for the acquisition of IT-related services.

“Thus, in effect the telcos were acting as intermediaries/ payment aggregators by facilitating acquisition of services by their subscribers. Therefore, in view of the violation of foreign exchange regulations, the SBP revoked the designation of banks of telcos for such payments,” it added.

However, to facilitate their legitimate IT related payments, the telcos have been advised through their banks to resubmit their requests, the SBP explained.

It said that if any entity, including a telco, intended to operate as an intermediary or payment aggregator and such arrangement involved the outflow of foreign exchange, it had to approach the SBP, separately through its bank, to seek special permission to provide such services under the Foreign Exchange Regulation Act, 1947.