Senate panel probes Rs26 billion SMS charges dispute between banks, telcos

Senate Standing Committee on Finance, chaired by Saleem Mandviwalla, on Wednesday examined complaints of excessive SMS charges on banking customers, as banks and telecom companies blamed each other for fees estimated at Rs26 billion.

The panel directed both sides and the State Bank of Pakistan to submit detailed data on transaction volumes and service charges. The committee also decided to seek input from the Pakistan Telecommunication Authority.

Representatives of the Pakistan Banks Association told the panel that SMS charges fall into two categories: mandatory alerts required under regulatory rules and transaction-related messages sent with customer consent. Banks said such alerts are necessary for security and fraud prevention, and that charges are disclosed in their schedules.

Banking officials stated that the sector pays around Rs25.6 billion annually to telecom operators for SMS services, while recovering about Rs18.7 billion from customers, resulting in a gap of roughly Rs7 billion. They also noted that telecom rates for banks have increased by about 88% in recent years and remain higher than rates charged to individual consumers.

Telecom representatives said SMS services remain a core business segment but argued that banks charge customers more than the cost incurred. They said the volume of messages sent to customers typically translates to lower monthly costs than what banks charge, and noted that similar rates apply to other large-scale programmes.

Officials informed the committee that regulatory SMS alerts are mandatory under central bank rules and, in some cases, should be provided free of cost. However, concerns were raised about the feasibility of collecting detailed financial data from banks on SMS-related services.

Lawmakers questioned the pricing structure, noting that the underlying cost of SMS services is significantly lower than the rates charged. The committee was also informed that banks and telecom companies operate through third-party aggregators to deliver messages to customers, rather than settling payments directly.

The panel decided to continue its review in a subsequent meeting after receiving detailed submissions from all stakeholders.