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From December 1, Pakistanis Can Only Make Playstore Purchases Using Credit or Debit Cards.

Over the last several days, it has been widely reported that the Google Playstore would supposedly “close” in Pakistan on December 1; however, recent developments have shown this assertion is false. From December 1, Pakistanis can only make Playstore purchases using credit or debit cards, but they won’t be able to pay for apps using their mobile balances. According to a Google spokesperson:

"Google Play is now accessible for all users in Pakistan, and it will continue to be so in the foreseeable future. However, the variety of acceptable payment methods could change during the transaction. Users in Pakistan will only be able to use their credit or debit cards to make purchases from the Play Store beginning on December 1, 2022. This is due to local regulations and will remain until alternative payment options become available.

The telecommunications companies that have formed partnerships with foreign service providers, such as Google, but have been told they cannot remit payments due to this action are likely to suffer the most severe consequences.

"Any move with regards to the blocking of payments under DCB will not only impact the telcos' data usage in the case of gaming and entertainment apps, but it will also have a negative impact on the freelancers," said the official.

The Direct Carrier Billing (DCB) for cellular mobile carriers in Pakistan was terminated by the State Bank of Pakistan, which brought the total amount of the offer up to 34 million dollars. Following this, a letter was sent to the Pakistani central bank from the Ministry of Information Technology and Telecom, the Pakistan Telecommunication Authority (PTA), and four mobile carriers. Information Technology and Telecom Minister Amin Ul Haque wrote a letter to the Minister of Finance, Ishaq Dar, in which he stated that payments related to information technology, such as the purchase of mobile apps and subscription services through Playstore, that were less than $100,000 were authorized by the SBP through the designated commercial banks.

On the other hand, the SBP terminated the designation of banks in September 2022 to stop those banks from making Playstoer payments on behalf of telecom operators and mobile cellular providers.

“This revocation has restricted the telecom operators to paying global IT platforms like Google, YouTube, Meta, and Spotify, etc., for the operator-facilitated digital services and related customer payment process referred to as Direct Carrier Billing.” Direct Carrier Billing is a standard mechanism offered by Cellular Mobile Operators (CMO) globally and has a sizeable tax value.

While providing these services, mobile carriers in Pakistan contributed around Rs5.3 billion to the national exchequer, according to the MOIT’s estimates from the previous year. It issued a warning that;

“because of non-payment, all major players, such as Google, Amazon, and Meta, are being impacted, and they will likely discontinue their services in Pakistan.”

In addition, Minister Amin Ul Haque is quoted in that report as saying;

"Recently, Google has issued letters to halt the DCB services of mobile carriers until all overdue payments are paid. This will remain in effect until all payments have been made in full. The notifications were delivered to Jazz and Ufone (which are included in the attachment)"

He asked for the attention and help of the minister of finance to have the DCB revocation of IT designation of various banks permitted for Playstore payments on behalf of telecom operators reversed and to guarantee outstanding payments to global digital platforms were made on time. In the meantime, the SBP issued a statement stating that during recent off-site reviews, it was observed that Telcos were remitting the bulk of the funds for video gaming, which is entertainment content purchased by their customers using airtime, following the DCB. This was in addition to utilizing the mechanism to remit funds for IT-related services for their use, which was also mentioned in the statement.

An official working for one of the most prominent telecommunications companies have said that yearly payments from the telecommunications sector for DCB and other digital services total around sixty million dollars.

However, official sources also claim that the telco’s authorization for direct carrier billing for the Playstore was never removed and that they were requested to re-categorize payments of this kind.

"Payments for wider information technology services, such as cloud services, are made following specified foreign currency laws and are processed via a recognized bank."

The SBP has been using various regulatory intricacies to its advantage to stop the flow of funds out of the nation. Even though LCs for importing raw materials for the mobile phone manufacturing industry were not blocked when a ban was imposed on luxury items, the SBP began delaying approvals for opening LCs shortly after the ban was implemented.

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