Careem Pay gets SBP’s In-Principle Approval for EMI licence

KARACHI: Careem Pay, a fintech affiliate of Careem, has earned In-Principle-Approval (IPA) of the State Bank of Pakistan (SBP) for an Electronic Money Institution (EMI) licence, the company announced on Wednesday, marking a step towards extension of services beyond its own ecosystem.

Careem, which gained popularity as a ride-hailing app before expanding to become a multi-service platform that offers delivery services as well as peer-to-peer credit transfers and mobile top-ups, said that it launched its fintech affiliate “as an independent entity that plans to invest $50 million to leapfrog the fintech ecosystem in Pakistan”.

“Subject to SBP final approval, this (development) paves the way for Careem Pay to bring convenient and accessible financial services to 9+ million customers, 800,000 captains and 3000+ merchants both on and beyond the Careem App,” it said.

“Once Careem Pay achieves operational readiness from SBP, it will offer services ranging from bill payments including utilities, government and education fees, peer-to-peer (P2P) transfer and wallet cash-outs.

“In subsequent phases and subject to approvals from SBP, Careem Pay aims to provide cards, inward international remittance services as well as services that will enable customers and merchants to make and accept online or offline payments.”

Under central bank regulations, prospective EMI applicants are granted EMI licence in three stages — In-Principle approval, approval for Commencement of Pilot Operations, and Final Approval i.e. License, according to the SBP.

“Subject to the relevant approvals, we can expect it should be 12 months from the IPA to a full-launch — in between there will be operational readiness and the pilot,” Noman Khurshid, General Manager Pakistan, Careem Pay, told Business Recorder. “Obviously, these timelines can evolve, depending on different factors.”

Khurshid added that the options being explored for its plan of wallet cash-outs include a bank account, Careem cards, or ‘Raast’, the central bank’s instant payment system that will enable end-to-end digital payments among individuals, businesses and government entities.

“We are exploring the different options to see how we can simplify the experience. There is a lot to learn in this market.”

Mudassir Sheikha, CEO and co-founder of Careem, said the high percentage of unbanked population in Pakistan is an enormous opportunity to leapfrog cash payments into digital transactions.

Pakistan’s fintech space

Careem Pay becomes the 10th entity to be given at least the IPA, according to data available on the SBP website.

Three companies – NayaPay, Finja, and CMPECC – have their status as ‘Live’, while three others – Wemsol, SadaTech Pakistan, and TAG Innovation – have been granted Pilot Approval.

The remaining three – EP Systems, Akhtar Fuiou Technologies, and Hubpay – have been granted the IPA.

Pakistan’s fintech space has gained momentum in recent years with the sector attracting over one-fourth of total startup investment in 2021, according to the 2021 Pakistan Startup Ecosystem Report published by Invest2Innovate.

The report added that ecommerce had been the largest sector both in terms of deal count (64) and amount ($315 million) from 2015-2021, but its dominance has decreased as fintech startups continually raised bigger rounds in 2021, amounting to a total of $95 million across 25 deals.

Pakistan’s startup sector witnessed its best year in 2021, as 81 deals worth $350 million were made, according to a Deal Flow Tracker by Invest2Innovate (i2i).