December 1, 2023

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Pakistan strips YC-backed Tag of fintech services, orders to pull apps • TechCrunch

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Pakistan strips YC-backed Tag of fintech services, orders to pull apps • TechCrunch

Pakistan’s central bank on Friday revoked the in-basic principle and pilot functions acceptance of Tag to function as an digital dollars establishment in a move that poses existential threat to the business.

Point out Financial institution of Pakistan explained in an order that it is revoking Tag’s acceptance to function as an digital cash establishment, the permission that is demanded for entities to give progressive, user-pleasant and value effective reduced-benefit digital payments devices these as wallets, playing cards and contactless payments. The central financial institution has also purchased the startup to close all customers’ wallet accounts and pull its applications from the application retailers with speedy influence.

The central bank’s motion is in reaction to Tag violating regulatory prerequisites and “other concerns” that emerged in the course of the pilot functions of the organization, it claimed. The final decision has been taken to “protect the desire of the community at large,” it added.

The regulatory motion follows a months-lengthy probe into Tag, which provides banking and monetary expert services these as contactless payment, cards and wallets to end users in Pakistan.

The startup has been accused of forging documents to the central financial institution, according to an previously investor letter attained by TechCrunch. The central bank ordered Tag in August to “immediately” refund all cash of clients.

Tag is a single of the swiftest developing startups in Pakistan. It was valued at $100 million in its seed funding spherical in September very last yr. The startup counts Liberty Metropolis Ventures, Canaan Companions, Y Combinator, Addition and Mantis among its backers.

The Point out Financial institution of Pakistan did not right away respond to a ask for for remark by way of cell phone and email.

Friday’s action is yet another blow to the nascent but rapidly escalating startup ecosystem in Pakistan, which clocked record funding very last calendar year. Airlift, once the most precious startup in the South Asian industry, shut down in July this year right after it failed to safe fresh new funding.

Tag’s chief government could not be quickly arrived at for comment. The startup will take a look at desirable the Condition Bank’s choice, a resource with direct knowledge of the issue advised TechCrunch.

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