Pakistan’s central lender on Friday revoked the in-principle and pilot operations acceptance of Tag to function as an digital cash establishment in a go that poses existential menace to the company.
Point out Bank of Pakistan mentioned in an order that it is revoking Tag’s approval to run as an digital money establishment, the authorization that is required for entities to supply impressive, user-friendly and price tag powerful small-price electronic payments devices this sort of as wallets, cards and contactless payments. The central financial institution has also ordered the startup to close all customers’ wallet accounts and pull its applications from the app retailers with instant result.
The central bank’s motion is in response to Tag violating regulatory requirements and “other concerns” that emerged through the pilot functions of the company, it reported. The conclusion has been taken to “protect the fascination of the community at big,” it additional.
The regulatory motion follows a months-very long probe into Tag, which provides banking and fiscal expert services this sort of as contactless payment, playing cards and wallets to buyers in Pakistan.
The startup has been accused of forging files to the central lender, in accordance to an previously investor letter acquired by TechCrunch. The central financial institution requested Tag in August to “immediately” refund all funds of clients.
Tag is a single of the fastest developing startups in Pakistan. It was valued at $100 million in its seed funding spherical in September previous yr. The startup counts Liberty Metropolis Ventures, Canaan Companions, Y Combinator, Addition and Mantis amongst its backers.
The State Lender of Pakistan did not immediately respond to a ask for for remark through telephone and e-mail.
Friday’s motion is another blow to the nascent but quickly developing startup ecosystem in Pakistan, which clocked history funding previous 12 months. Airlift, when the most useful startup in the South Asian sector, shut down in July this calendar year after it unsuccessful to safe fresh new funding.
Tag’s chief govt couldn’t be instantly reached for remark. The startup will check out attractive the Condition Bank’s final decision, a source with direct knowledge of the subject explained to TechCrunch.
