Banks Charging Up to Rs 12 per SMS Despite Rs 2 Telecom Cost, Senate Told

Banks in Pakistan are charging customers significantly higher rates for SMS alerts compared to underlying telecom costs, a Senate panel was informed on Thursday, raising concerns over consumer burden and pricing transparency.

The Senate Standing Committee on Finance was told that while telecom operators provide SMS services at a cost of Rs 1 to Rs 2 per message, banks are charging customers as much as Rs 12 per SMS, translating into monthly fees ranging between Rs 180 and Rs 325 for around 15 alerts.

The committee, chaired by Saleem Mandviwalla, questioned the justification for the wide gap, with lawmakers seeking clarity on why customers are being billed at significantly higher rates despite relatively low telecom costs.

Officials from the Pakistan Telecommunication Authority (PTA) explained that telecom companies supply SMS services to third-party aggregators at approximately Rs 2 per message. These aggregators then provide the service to banks, adding an additional layer of cost.

However, committee members argued that the pricing structure still raises concerns about excessive charges being passed on to consumers. Senator Abdul Qadir questioned why customers should bear the burden of intermediary costs when the base service remains inexpensive.

Representatives of the banking sector said outsourcing SMS services to aggregators reduces operational complexity, noting that developing and maintaining in-house systems could be more costly. They also pointed out that transactional SMS alerts carry higher value due to their critical nature, as they provide real-time updates on financial activity.

The State Bank of Pakistan (SBP) informed the committee that banks collectively pay approximately Rs 25.6 billion annually to aggregators while recovering around Rs 18.7 billion from customers, indicating a complex cost-recovery structure.

The discussion also extended to broader issues in the digital payments ecosystem. Lawmakers stressed the need to promote domestic solutions such as PayPak cards to reduce reliance on international payment networks, which currently cost Pakistan around $250 million annually in foreign exchange outflows.

Officials noted that while PayPak’s adoption remains limited, with fewer than 5 million cards in circulation compared to nearly 90 million Visa and Mastercard cards, its market share has grown to about 24 percent.

Minister of State for Finance Bilal Azhar Kayani said the government is actively promoting digital payments and cashless systems, adding that the number of digital points of sale has increased from 500,000 to 1.3 million in recent years.

The Senate panel’s observations highlight increasing regulatory scrutiny of banking charges, as policymakers push for greater transparency and consumer protection in Pakistan’s evolving financial landscape.

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Senate Committee Raises Serious Concerns Over High SMS Charges by Banks in Pakistan