Context & Objective: The expanding role of payment service providers in the global financial ecosystem and the increasing reliance of digital transactions on their infrastructure necessitate a rigorous review of regulatory policies. Over a decade ago, the Central Bank of Iran restricted the payment market to twelve companies, effectively halting the issuance of new licenses. This policy created a static market structure, prompting a formal complaint to the Iranian Competition Council, which initially ruled the moratorium as anti-competitive. However, the Board of Appeal overturned this decision, raising fundamental questions about market regulation. The objective of this research is to evaluate the legal validity of the Central Bank of Iran's cessation of licensing for payment service providers. Specifically, the central research question investigates how this licensing moratorium and the subsequent appellate ruling are interpreted under the competition rules within the Iranian legal system.
Method & Approach: This research is conducted using a doctrinal methodology integrated with a legal-institutional analysis model. It systematically examines the legal, economic, and regulatory dimensions of the Central Bank's licensing moratorium. The study analyzes the administrative decisions and the Board of Appeal's ruling strictly within the framework of domestic competition laws, statutory anti-monopoly provisions, and the constitutional mandates governing the national market.
Findings: The analysis reveals that the Central Bank's prolonged refusal to issue new licenses constitutes a violation of statutory duties, particularly Article 7 of the Law on the Implementation of the General Policies of Article Forty-Four of the Constitution of Iran, which expressly prohibits denying business licenses under the pretext of market saturation. Furthermore, the regulatory mandate stipulating that banking institutions must hold a minimum of fifty-one percent of the shares in any payment service provider restricts the market entry of independent firms and institutionalizes a discriminatory advantage for established credit institutions. The evaluation of the Board of Appeal's ruling demonstrates fundamental flaws. Procedurally, the board accepted the Central Bank's appeal well beyond the mandatory twenty-day statutory deadline. Substantively, the board failed to address the Central Bank's direct contravention of binding Cabinet approvals aimed at eliminating monopolies, improperly justifying the restrictive practices by citing broad prudential regulatory concerns.
Conclusion: The monopoly engineered by the Central Bank's licensing moratorium lacks valid legal justification and practically results in market obstruction, the entrenchment of existing corporate dominance, and the perpetuation of anti-competitive behavior. The Board of Appeal's decision to overturn the Competition Council's initial ruling is devoid of sufficient legal foundation. To genuinely enforce anti-monopoly legal requirements and restore healthy competition within the national payment ecosystem, it is necessary to amend the prevailing executive regulations. Specifically, the regulatory framework must be reformed to eliminate the mandatory fifty-one percent bank ownership requirement. Abolishing this structural barrier will facilitate the participation of independent investors and align the Central Bank's regulatory architecture with its statutory obligations.