Senate Reviews High SMS Charges On Bank Customers

The Senate Standing Committee on Finance, chaired by Saleem Mandviwalla, has undertaken a review of complaints concerning excessive SMS service charges imposed on banking customers, with the banking and telecom sectors attributing responsibility to each other over an estimated Rs26 billion in associated fees.

The Committee has directed both sectors, along with the State Bank of Pakistan, to furnish comprehensive data regarding transaction volumes and applicable service charges. Additionally, input is to be sought from the Pakistan Telecommunication Authority to facilitate a holistic assessment.

Representatives of the Pakistan Banks Association informed the panel that SMS-related charges are categorised into two segments: regulatory alerts mandated under applicable compliance frameworks and transaction-based notifications issued with customer consent. Banks emphasised that such alerts are critical for security and fraud prevention, and that related charges are disclosed within their official fee schedules.

Banking officials further stated that the sector incurs approximately Rs25.6 billion annually in payments to telecom operators for SMS services, while recovering around Rs18.7 billion from customers, resulting in a financial shortfall of nearly Rs7 billion. It was also highlighted that telecom tariffs applicable to banks have increased by approximately 88% in recent years and remain higher than rates charged to individual consumers.

Telecommunication representatives maintained that while SMS services constitute a significant business segment, banks are reportedly charging customers at rates exceeding the actual cost incurred. They noted that high message volumes typically result in lower per-unit costs, and that comparable pricing structures are applied to other large-scale service users.

Officials clarified that certain SMS alerts are mandatory under regulatory requirements prescribed by the State Bank of Pakistan and, in specific cases, should be provided without charge. However, concerns were raised regarding the practical challenges in obtaining detailed financial disclosures from banks in relation to SMS-based services.

Committee members questioned the prevailing pricing model, observing that the underlying cost structure appears significantly lower than the charges imposed on consumers. It was also noted that banks and telecom operators utilise third-party aggregators for SMS delivery, rather than engaging in direct billing arrangements.

The Committee has resolved to continue its review in a subsequent session upon receipt of detailed submissions from all relevant stakeholders.