The council said using electronic wallets should not lead to money creation or expand the money supply. Financial institutions are required to develop their e-wallet platforms in harmony with rules of the Central Bank of Iran to be announced soon, a CBI press release said.
A digital wallet (or e-wallet) is a software-based system that securely stores users' payment information and passwords for numerous payment methods and websites.
Defining a framework for the operation of electronic wallets, as a part of a plan for regulating operation of fintech startups, has long been on the CBI agenda. It had announced earlier that startups offering electronic wallet services need to incorporate an authorized bank or credit institution into their operations.
It has been stressed that this does not mean banks are allowed to interfere in the business of fintechs and will only act as an entity tasked with storing and safeguarding money entrusted to the wallets.
CBI officials have noted that involvement of financial institutions could remove existing legal hurdles in the way of fintechs offering electronic wallet services.
Regarding the framework of e-wallet operation, the CBI has stressed that startups “must not focus on raising deposits” because then they will be in breach of their legal framework and be seen as interfering in the work of banks and credit institutions. The business of electronic wallets should focus only on obtaining fees.
There are differences about allowing fintechs to tap into interests generated from people’s deposits in their wallets.
Increasing Opportunity
Rules announced by the CBI to make one-time password obligatory has helped foster the business of e-wallet startups. More people have started relying on e-wallets especially for smaller payments, as they do not need to go through the process of obtaining an OTP.
Using OTP is problematic for many people as they are required to install special applications on their smart phones. Some simply do not own a smart phone to be able to use the service.
The one-time password, developed to address shortcomings of static passwords, is a code valid for a single login or online transaction on a computer system or other digital devices that gets discarded in 60 seconds.
According to official data, more than 2.73 billion transactions worth 3,886 trillion rials ($16.8 billion) were processed by Iran's domestic payment network, Shaparak, in the calendar month to June 21.