Pakistan’s central bank has revoked fintech Tag’s approval in principle and permission to conduct pilot operations and ordered the startup to close all of its customers’ wallet accounts and remove its apps from app stores in a move that poses an existential threat to the company.
The State Bank of Pakistan said in an order that it was revoking Tag’s license to operate as an electronic money institution, entities licensed to offer innovative, user-friendly and cost-effective digital payment instruments such as wallets, cards and contactless payments.
The central bank’s action is in response to Tag’s violation of regulatory requirements and “other concerns” that emerged during the company’s pilot operations, he said. The decision was made to “protect the interest of the public as a whole”, he added.
The regulatory action follows a months-long investigation into Tag, which offers banking and financial services such as contactless payment, cards and wallet to users in Pakistan.
The startup has been accused of falsifying documents at the central bank, according to a previous investor letter obtained by TechCrunch. The central bank ordered Tag in August to “immediately” repay all customer funds.
Tag is one of the fastest growing startups in Pakistan. It was valued at $100 million during its seed funding round in September last year. The startup counts Liberty City Ventures, Canaan Partners, Y Combinator, Addition, and Mantis among its backers.
The State Bank of Pakistan did not immediately respond to a phone and email request for comment.
Friday’s action is another blow to Pakistan’s nascent but fast-growing startup ecosystem, which saw record funding last year. Airlift, once the most valuable startup in the South Asian market, closed in July this year after failing to secure new funding.