Pakistan's central bankers have taken the plunge into the world of digital payments with their own offering: Raast. It aims to create an instant low-cost payment system that can seamlessly and securely connect government entities, a variety of banks, including microfinance banks (MFBs), electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs) like 1Link and NIFT which may choose to take advantage of it. Currency and coins in circulation account for about 43% of Pakistan's total money supply. The introduction of Raast is part of the government's effort to modernize and document the nation's cash-based informal economy. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion. Digital financial services will also promote e-commerce in Pakistan.
|Raast Digital Payment System. Source: State Bank of Pakistan|
Raast Digital Payments:
Raast is a system of digital payment infrastructure. It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost.
Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs.
State Bank of Pakistan intends to demonstrate Raast's usefulness by first processing government payments to individuals, including government employees and Ehsaas welfare beneficiaries, before expanding it for business applications. SBP’s plan is to start person-to-person (P2P) payments using just the phone numbers in Q3/2021 and then bring merchants on board with QR codes by Q1/2022.
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