May 30, 2023

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

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

Pakistan’s central lender on Friday revoked the in-theory and pilot functions acceptance of Tag to operate as an digital income establishment in a go that poses existential risk to the agency.

Point out Bank of Pakistan reported in an get that it is revoking Tag’s acceptance to operate as an electronic funds establishment, the permission that is essential for entities to offer modern, user-helpful and expense powerful very low-value digital payments instruments these types of as wallets, playing cards and contactless payments. The central lender has also purchased the startup to close all customers’ wallet accounts and pull its applications from the app suppliers with instant result.

The central bank’s action is in response to Tag violating regulatory prerequisites and “other concerns” that emerged during the pilot functions of the business, it said. The determination has been taken to “protect the interest of the general public at large,” it added.

The regulatory action follows a months-extended probe into Tag, which gives banking and fiscal providers this kind of as contactless payment, playing cards and wallets to users in Pakistan.

The startup has been accused of forging files to the central lender, in accordance to an previously trader letter obtained by TechCrunch. The central lender requested Tag in August to “immediately” refund all funds of buyers.

Tag is a single of the fastest increasing startups in Pakistan. It was valued at $100 million in its seed funding round in September final calendar year. The startup counts Liberty City Ventures, Canaan Companions, Y Combinator, Addition and Mantis among its backers.

The State Lender of Pakistan did not quickly reply to a ask for for comment through cellphone and email.

Friday’s action is an additional blow to the nascent but quickly developing startup ecosystem in Pakistan, which clocked history funding final yr. Airlift, once the most beneficial startup in the South Asian market place, shut down in July this yr just after it unsuccessful to secure fresh new funding.

Tag’s main executive could not be straight away attained for remark. The startup will check out attractive the State Bank’s decision, a resource with direct information of the matter advised TechCrunch.