SBP revises interchange reimbursement fee for payment cards State Bank of Pakistan

SBP revises interchange reimbursement fee for payment cards

KARACHI: State Bank of Pakistan (SBP) on Friday revised interchange reimbursement fee for cards issued in the country used on domestic point of sale (POS) terminals.

The central bank said that in order to facilitate the acceptance of card-based payments, it has been decided that:

Interchange Reimbursement Fee (IRF) for cards issued in Pakistan used on domestic POS terminals shall be as follows:

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a) for debit and prepaid cards – not exceeding 0.2 per cent

b) for credit cards – not exceeding 0.7 per cent

Lower range of Merchant Discount Rate (MDR) i.e. 1.5 per cent is abolished in terms of the clause 2 (i) of PSD Circular No. 01 of 2020.

All e-commerce/online payment acquirers operating in Pakistan shall enable acceptance of Domestic Payment Scheme (DPS) card for card-not-present (CNP) transactions on their respective payment gateways by June 30, 2023.

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Previously, the SBP issued Circular No. 01 of 2020 on “Improving Payment Card Acceptance Infrastructure in Pakistan”.

As per the previous circular, the SBP stated during the past few years, there has been considerable growth in the digital payment infrastructure of the country, especially in the number of debit cards being issued by the banks to their customers.

Although, the Point of Sale (POS) infrastructure has also grown during the past few years, its growth has largely remained restricted to high value merchants in big cities. Some of the key challenges being faced by the POS acquiring industry in Pakistan include high Interchange Reimbursement Fee (IRF), lower than cost Merchant Discount Rate (MDR) to onboard high value merchants and less interest by banks in offering low cost domestic payment cards to their customers.

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In order to address the above challenges and increase the POS card acceptance infrastructure in the country especially at retail level; in line with the objectives of National Payment System Strategy (NPSS), it has been decided to implement the following measures: 

MDR for POS acquiring in Pakistan shall be within the range of 1.5 per cent – 2.5 per cent for both existing and new merchants. The Merchant categories mentioned at Annexure – A shall be exempt from this requirement.

The Interchange Reimbursement Fee (IRF) for debit and prepaid cards issued in Pakistan used on domestic POS terminals shall be capped at 0.5 per cent.

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Card issuers shall offer SBP approved Domestic Payment Scheme (DPS) Card as the default card at the time of issuance or renewal of debit cards. Accordingly card requesting customers shall be offered the following options in order of priority:

Either an exclusive DPS card or a DPS card co-badged with an International Payment Scheme (IPS) An exclusive IPS card upon written request of the customer.

The above instructions shall come into effect from April 01, 2020.