Pakistan’s central bank on Friday withdrew Tag’s principal and pilot approval to operate as an electronic money institution in a move that poses an existential threat to the company.
State Bank of Pakistan said in an order it is revoking Tag’s approval to operate as an electronic money institution, the authorization needed for entities to offer innovative, easy-to-use and cost-effective low-value digital payment instruments such as wallets. , cards and contactless payments. The central bank has also ordered the startup to close the wallet accounts of all customers and remove its apps from the app stores with immediate effect.
The central bank’s move is in response to Tag’s violation of regulatory requirements and “other concerns” raised during the company’s pilot operations, it said. The decision was taken to “protect the interests of the general public,” it added.
The regulatory action follows a months-long investigation into Tag, which offers banking and financial services such as contactless payments, cards and wallets to users in Pakistan.
The startup has been accused of falsifying documents to the central bank, according to an earlier investor letter obtained by londonbusinessblog.com. The central bank ordered Tag in August to “immediately” refund all customer deposits.
Tag is one of the fastest growing startups in Pakistan. It was valued at $100 million in its seed funding round last September. The startup counts Liberty City Ventures, Canaan Partners, Y Combinator, Addition and Mantis among its donors.
The State Bank of Pakistan did not immediately respond to a request for comment via phone and email.
Friday’s move is another blow to Pakistan’s burgeoning but fast-growing startup ecosystem, which secured record funding last year. Airlift, once the most valuable startup in the South Asian market, shut down in July this year after failing to secure new funding.
Tag’s CEO was not immediately available for comment. The startup will appeal the State Bank’s decision, a source with direct knowledge of the matter told londonbusinessblog.com.