SBP Cannot Force Merchants to Accept Contactless Payments, Clarifies Central Bank

The State Bank of Pakistan (SBP) has clarified that it cannot compel retailers to accept contactless payments made through smartphones, smartwatches, and other wearable devices, as merchants fall outside its regulatory purview. The central bank told ProPakistani that it does not regulate merchants and therefore cannot direct them to accept any particular payment method.

This comes as several shops and superstores, including Metro, have stopped accepting or restricted NFC payments made via digital devices, creating uncertainty over whether retailers can refuse phone-based payments while continuing to accept contactless debit and credit cards. The SBP's stance means it cannot force sellers to restore phone-based contactless payments or require them to support a specific digital payment method.

On the question of liability when a PIN-free contactless payment is disputed as fraudulent, the central bank explained that payment schemes such as Visa, Mastercard, and PayPak have dedicated liability and dispute-resolution frameworks covering customers, merchants, and acquiring banks. Responsibility is determined on a case-by-case basis, depending on the actions, omissions, or negligence of the parties involved. This means liability is not automatically assigned to the customer or merchant whenever a contactless transaction is disputed. The SBP said these payment-scheme rules contain detailed provisions governing the rights and responsibilities of all parties and are designed to protect customers.

The central bank has also settled the question of the maximum amount allowed for contactless transactions without entering a PIN. ProPakistani has confirmed that the current limit for PIN-less contactless payments in Pakistan is Rs. 3,000, not Rs. 3,500. This clarification is important for users who rely on tap-to-pay services through smartphones, smartwatches, and physical contactless cards.

As the world moves toward advanced payment options and AI, merchants in Pakistan still have substantial influence over the availability of individual payment methods even when the payment infrastructure supports them. The SBP's clarification underscores that while the central bank can regulate banks and payment schemes, it cannot dictate the payment choices of individual retailers.

The development highlights a grey area in Pakistan's digital payment ecosystem, where consumers may find inconsistent acceptance of contactless payments across different merchants. The SBP's position suggests that resolving such issues may require collaboration between payment schemes, banks, and merchants rather than direct regulatory intervention.