Electronic Money Institutions (EMI) Article


The advancement in technology over time continues to amaze the human mind while being its very own creation. The most revolutionary breakthrough of this development is the introduction of electronic money which has further allowed these money transactions to be made electronically through electronic money institutions (EMI). The possibility of this transaction is a direct product of development in global economy and information technologies, hence; the triumph of electronic money varies amongst countries depending on multiple factors that reflect their development. These development navigating factors accordingly build acceptance for shifts as massive as electronic money transactions in societies.

The acceptance for the occurrence of electronic money transactions eventually leads us to institutions executing the transactions by offering innovative, user- friendly and cost-effective low value digital payment prepaid instruments such as prepaid cards and contactless payment instruments. To complement the evolution in the economic world, the law requires revision. The existing laws were tailored to the conventional economic practices and to regulate the new methods new laws are being introduced. In Pakistan the State Bank of Pakistan (SBP) is taking active measures to oversee EMIs and the transactions carried out by them.

The Payment Systems and Electronic Funds Transfer Act, 2007 defined E-money as monetary value stored on an electronic device or payment instrument issued on receipt of funds and accepted as a means of payment by entities other than the issuer. In order to regulate the EMIs operating in Pakistan the SBP has introduced Regulations aiming at achieving five (5) main objective; introduce a regulatory framework for EMIs offering their services to the general public, set out the minimum service standards and requirements for EMIs to ensure safe and cost effective payment services, define the activities that an EMI and its agents’ network maybe permitted to carryout, provide protection to EMI consumers and work to include digital payments and finance in its system.


The SBP does not appear to grant much room to EMIs to make errors or to experiment outside its defined parameters which have been drafted meticulously for example even for an EMI that has acquired its license as per these Regulations a further approval from SBP is required in case the Institution wishes to offer cross-border e-money products and services. The initial essentials for acquiring the EMI license are not only elaborate but also austere. Apart from the regular essentials, the SBP has reserved itself the authority to inspect the equipment of a proposed EMI, business feasibility report (the specifics of which have further been set out), compliance with anti- money laundering/ combating the finance of terrorism (AML/CFT), details of its agents, etc.

The stringent laws of SBP also modulate the possible stakeholders of a proposed EMI for example its directors, key executives and shareholders. It tends to infiltrate as far as seeking the previous names of these stakeholders in case they have ever changed their names along with explanation to why did they do so. Accordingly, various aspects of the individual stakeholder’s history are required. This information may not be submitted once but updated in the event of any change in them.

As the SBP delineates the requirements to obtain and/or maintain a license to operate as an EMI, the terms and expressions employed in these regulations audibly convey that any failure in complying with the lawcan lead to irremediable consequences where the SBP holds the authority to suspend or revoke the license at any stage. This compliance is not limited to the obligations pronounced by law, but the SBP may oblige the applicant to submit any further information or verifications.

The SBP remains an impregnable entity. Its decisions cannot be challenged in a court of law. Hence, an applicant or holder of a license issued by the SBP may not tamper with its laws. The key element to take note of is that EMIs are merely an emerging industry in Pakistan, therefore, currently of keen interest for the SBP.

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