RIZWAN BHATTI

KARACHI: The State Bank of Pakistan (SBP) Wednesday issued Electronic Fund Transfer (EFT) regulations, effective from 1st October 2018, to ensure consumer protection and payment transparency.

As per regulations, Authorized Financial Institutions (AFIs) will be liable to its consumer for any unauthorized transaction, loss and/or damages caused by the failure of an electronic fund transfer system or equipment to complete a transaction accepted by a terminal, in accordance with the consumer's instruction as mentioned in Section 43 of the PS&EFT Act 2007.

AFIs will pay the mark up at 3 percent above the SBP policy rate to their consumer for the period of delay subject to determination and notification of the error as per Section 36 of the PS&EFT Act, 2007. However, Islamic financial institutions (Originating/ Beneficiary AFIs) shall develop mechanism to compensate consumer in light of Islamic Banking Principles/ Regulations.

Originating/Beneficiary AFIs will pay the compensation amount to their consumer without any claim from the consumer within fifteen days after determination of the fact that error has occurred.

Electronic Fund Transfer (EFT) enables customers to access their bank accounts electronically for fund transfers using different channels like ATMs, internet and mobile banking etc.

In order to set forth the minimum information of originator and beneficiary to be required in a payment message being used to initiate/process an EFT, the state bank of Pakistan has issued EFT Regulations under section 3(1) and section 26 of Payment Systems & Electronic Funds Transfer Act 2007.

Further, these regulations highlight the originator, Payment System Operator/Payment Service Provider (PSP) and Beneficiary responsibilities, Preauthorized Transfers, Compensation Policy for unauthorized and/or delayed EFT, Disclosure requirement, Periodic Statement, Dispute Resolution process and Record Retention and Reporting requirement etc.

The purpose of these regulations is to promote EFTs in the country, ensure consumer protection and payment transparency by standardizing EFT as broadly outlined in PS&EFT Act 2007 and setting uniform regulations, policy and procedures, applicable to AFIs, PSOs and PSPs operating in Pakistan.

These regulations will be applicable to domestic Electronic Fund Transfers, being offered or processed by Authorized Financial Institutions (AFIs), Payment System Operators (PSOs), Payment Service Providers (PSPs), which are initiated or processed through alternative delivery channels (ADCs) such as POS terminals, ATMs, mobile banking, internet banking, call centre banking, branchless banking platforms, PRISM and any other channel as and when approved by SBP.

However, Electronic Fund Transfers used for customer to merchant payments for the purchase of goods and services shall not come under the purview of these regulations.

As per regulations, activate EFT services for only those payment instruments and channels against which consumer's consent has been obtained. The consent from existing consumers should also be obtained for the purpose of regularization.

AFIs will be liable for refund to consumer resulting from unauthorized transactions due to security breaches; control failures and/or negligence form their end. AFI should refund amount equal to unauthorized EFT amount to the originator and compensation as per the rate mentioned in section "9" of these regulations.

AFIs will only allow preauthorized transfers upon the request of consumer through appropriate means after necessary consumer due verifications.

They will notify the consumer, either through email or SMS or any other appropriate means, about the execution of preauthorized transfers and will stop preauthorized transfers from Originator's accounts if it is notified orally through recorded line after necessary consumer due verifications or in writing at least three business days before the scheduled date of the transfer.

AFIs/PSOs/PSPs have been asked to keep a record of complaints and its resolutions for a time frame of at least five (05) years. However, record of complaints under investigation by any Law Enforcement Agency, challenged in honourable court of law etc. should be retained till the resolution/verdict of the case or as required by the law.