Tag’s in-principle and pilot operations approval to function as an electronic money institution was suspended by Pakistan’s central bank on Friday, posing an existential danger to the company.
The State Bank of Pakistan stated that it is revoking Tag’s authorization to operate as an electronic money institution, which is required for entities to provide innovative, user-friendly, and cost-effective low-value digital payment instruments such as wallets, cards, and contactless payments.
The central bank has also ordered the firm to immediately deactivate all consumer wallet accounts and remove its apps from app stores.
Tag violated regulatory rules, as well as “other problems” that arose during the startup’s pilot activities, according to the central bank. The decision was made to “defend the general public’s interest,” according to the statement.
The regulatory decision comes after a months-long investigation into Tag, which provides banking and financial services to consumers in Pakistan such as contactless payments, cards, and wallets.
According to an earlier investor letter received by Founder Pakistan, the firm has been accused of fabricating documents for the central bank. In August, the central bank directed Tag to “immediately” repay all consumer payments.
In its seed fundraising round last September, Tag was valued at $100 million. Liberty City Ventures, Canaan Partners, Y Combinator, Addition, and Mantis are among the startup’s investors.
The startup competes with EMI in Pakistan such as Sadapay, Nayapay, and other EMIs that operate in Pakistan. The latest trend in the fintech ecosystem had a focus on disrupting opportunities in the consumer side of Fintech.
However, the latest trend suggests that opportunities are there in the B2B and other consumer fintech sectors that are underserved such as investment, etc.
