Fintechs Oppose New CBI Restrictions

EghtesadOnline: Iran Fintech Association, a non-government society formed by founders of fintech applications, has again voiced opposition to the recently announced restrictions on financial facilitators.

News ID: ۷۸۷۴۲۴

14 December 2021

The association's board in an open letter to the judiciary head earlier this week opposed CBI policies regarding innovators. "Iran Fintech Association believes that the Central Bank of Iran policies and practices are hindering the growth of innovative services and promoting monopoly in the payment sector," Way2pay reported.

The CBI has obliged payment facilitator applications to get the online trust logo ‘e-Namad’, as of Nov 25.

Fintechs, however, say the AML regulations, in which online services must have the e-Namad logo on their website, do not require payment facilitators to do so.

The logo displays that the online services offered by such sites are safer than websites without the trust symbols and have been approved by the relevant government bodies.

Applicants need to go through time-consuming and stringent processes to be able to obtain the badge.

"By disrupting the operation of innovative businesses, the CBI has been [only] supporting the interest of banks," the letter complained.

According to available data, the average daily payment requests submitted by facilitators has declined by a massive 75% since the implementation of the new rules.

The CBI said earlier that fintechs can continue to operate as long as they are not involved in money creation, forex deals, offering payment tools (like bank cards) or attracting deposits.

Later it was reported that the CBI would establish a special regulatory body for the fintech sector. However, in October 2017 the regulator had a change of heart.

It said it would neither establish the new institution for supervising fintechs nor issue new licenses for financial services providers.

Instead, it announced frameworks for the operation of payment aggregators, payment facilitators, personal finance management services and fintechs offering cryptocurrency services.

The association criticized the CBI's refusal to increase the number of payment service providers. "The CBI is denying the entry of new players into the market, despite the government's decision to eliminate monopolies in the payment sector."

Currently, 12 authorized payment service providers (PSP) are active in Iran’s e-payment industry along with 250 fintech apps.

A recent survey by Way2Pay showed that almost one-third of the applications offer payment services. Personal finance management solutions and cryptocurrency exchanges rank next.

The survey also found that 66% of fintech founders are university grads and in the 25-35 age bracket. Given the high potential of the sector, the IFA has the right to make its valid concerns known to the highest authorities and oppose measures that hinder and not help its members.