Digital transactions in Pakistan soared 31.1% to Rs. 88 trillion or $500 Billion in fiscal year 2020-21, according to the nation's top central banker. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, Governor of the State Bank of Pakistan, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value. The nation's central bank also reported that the large-value payments segment, known as Real-time Inter-Bank Settlement Mechanism (PRISM), saw growth of 60% by volume and 12.8% by value to Rs. 444.6 trillion or $2.5 trillion in FY 2020-21. There are several factors driving rapid shift to digital technology, including expanding digital infrastructure, new technologies and the government's efforts to document Pakistan's huge undocumented economy. Grey-listing of Pakistan by the Financial Action Task Force (FATF) has also played a role.
Internet & Mobile Banking in Pakistan. Source: SBP |
Digital Transactions Growth:
Growth in digital transactions was led by major uptake in mobile banking (29% increase in the number of users and 133.6% and 178.7% hike in volume and value, respectively) and internet banking (32% increase in the number of users and 65.1% and 91.7% up in volume and value, respectively), according to the State Bank of Pakistan. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, the head of Pakistan's central bank.“Therefore, there is a huge potential for enhancing financial inclusion,” he added.
E-Banking in Pakistan. Source: Dawn |
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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24 comments:
I, a small sized fish, really benefit from
@HBLPak
internet banking.
But lots more needed for digital banking to really take off
address transaction limits, trust deficit, hidden fees, refusal of digital payments
And we should thank FATF for this mini revolution. I know many in Pakistanis are deeply skeptical about its program and consider this institution as an unfair mean to harm Pakistan but I think we need to formalize/document our economy to reduce corruption and fulfilling FATF requirements is a step in the right direction.
More clarity is needed on this $500 billion number.
Qasim: "More clarity is needed on this $500 billion number"
Financial transaction numbers are regularly posted by the State Bank of Pakistan. All formal documented financial transactions are visible to the Central bankers. These figures do not include undocumented economy which is about 50% of the formal economy.
https://www.southasiainvestor.com/2014/05/pakistans-undocumented-entrepreneurs.html
This will also boost the tax net,and is the stepping stone,to a digital PKR
Mobiles + Wifi + Consumerism + Increasing disposal incomes + Young Population = Salvation !
The key is tech - Mobile + WiFi - and that explodes the potential,in Education and Social Inclusion !
Jiye Jiye Pakistan !
NayaPay secures $13 million, largest seed funding in South Asia for its messaging and payment app – TechCrunch
https://techcrunch.com/2022/02/23/nayapay-secures-13-million-largest-seed-funding-in-south-asia-for-its-messaging-and-payment-app/
Pakistan-based fintech platform, NayaPay, has raised $13 million in a seed round to rollout its multi-service messaging and payment app, and to build payment acceptance and financial management tools for businesses in the South Asian country.
NayaPay CEO and founder Danish Lakhani told TechCrunch that the super-app allows people residing in Pakistan to send and receive money, split bills and make payments conveniently from smartphones. They have also issued virtual and physical Visa cards linked to the NayaPay wallet further allowing its users to make POS payments, and businesses to accept payments.
Lakhani said that NayaPay is leading a digital payment revolution in Pakistan, a cash-heavy economy, where only 1% of $4 trillion payments are done electronically. This is in a country of 220 million people. But NayaPay’s goal is even bigger; to bank millions of adults that remain unbanked, with women affected the most — only one in three women holds a bank account. The youth and freelance communities in Pakistan are also majorly locked out by traditional banks. About 100 million people are unbanked in Pakistan, according to this World Bank report.
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Pakistan’s NayaPay Pvt. has raised $13 million in early stage funding as it seeks to capture millions of users in one of the world’s largest under banked nations.
The Karachi-based startup’s seed round was led by Zayn Capital, MSA Novo and Silicon Valley early-stage investor Graph Ventures, Chief Executive Officer Danish Lakhani said in an interview. NayaPay became the first startup to offer financial services after receiving a license from the State Bank of Pakistan in August. The fintech’s chat-led payments app started by targeting students and freelancers.
https://www.bloomberg.com/news/articles/2022-02-24/startup-nayapay-raises-pakistan-s-biggest-fintech-funding-round
Pakistan aims to spur economic growth to 6%
Finance Minister Shaukat Tarin confident of 6% sustainable GDP growth to reduce dependence on IMF; Aims at over $100 billion exports in next five years; ‘Super cycle’ is a serious threat to global economic recovery
https://www.khaleejtimes.com/economy/pakistan-aims-to-spur-economic-growth-to-6
“We don’t need the IMF if we achieve sustainable growth of six per cent. I don’t think we need another IMF programme once we complete the ongoing extended fund facility (EFF) in Setptember,” Tarin told Khaleej Times in an exclusive interview in Dubai.
The IMF, which forecasts four per cent GDP growth for Pakistan, said the EFF programme had strengthened Pakistan’s fiscal buffers before the start of the Covid-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020.
Pakistan, which secured more than 20 bailouts from the IMF in the past five decades, signed a $6 billion loan programme in July 2019. It completed the fund’s six reviews and drew $3 billion so far to support the country’s foreign exchange reserves, which currently stood firm at $23 billion.
“We are going to start a two-week process of seventh IMF review of Pakistan economy on Monday [March 7, 2022]. The successful review will help draw another $1 billion tranche as we have already achieved the targets in December,” Tarin said, and adding that the eighth and ninth reviews will bring the remaining $2 billion to the national kitty by September.
The IMF, which forecasts four per cent GDP growth for Pakistan, said the EFF programme had strengthened Pakistan’s fiscal buffers before the start of the Covid-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020. It also warned that Pakistan’s economy remains vulnerable to flare-ups of Covid-19, tighter international financial conditions, a rise in geopolitical tensions and delayed implementations of structural reforms.
No more IMF help
“The sustainable growth of five to six per cent is the only way to reduce dependence on IMF and other multinational donars, and we are confident of achieving this target under the leadership of Prime Minister Imran Khan,” the finance minister said.
Elaborating, he said the government’s economic reforms had revived sick industries, improved the agriculture sector and boosted exports despite commodity price shock in international markets. However, the country still needs to increase saving rates and revenue collection to sustain the growth momentum in coming years.
“We are working very hard to increase saving rates and tax collections as well as bridge the gap between exports and imports. Revenue collections have already hit Rs6 trillion, and next year we will achieve Rs8 trillion taxes,” Tarin said.
Economic experts said the rate of savings, which is currently around 15 per cent, should be increased to 25 per cent in Pakistan. They also said the tax-to-GDP ratio should also be increased to 20 per cent from 10 per cent to sustain higher growth momentum.
“Pakistan’s information technology has an immense potential to grow, and the government is keen to revolutionise this sector to boost exports in coming years. We can double our traditional exports in next four to five years and lift IT exports by providing incentives to the sector and building a strong ecosystem for startups in the country,” the finance minister said.
“In the next five years, our traditional exports will touch $60 billion plus while IT exports could be at $50 billion, pushing the tally to over a $100 billion annually. In addition, $30 billion remittances per annum will help ensure a sustainable current account surpluses,” he added.
Bilal I Gilani
@bilalgilani
Pakistani banking system processed 227 trillion Rs of transactions in one quarter
That too when only 5% transaction are through banking channels
Pakistan's true potential is yet to be explored and exploited
https://twitter.com/bilalgilani/status/1502366055410323457?s=20&t=-j9Bvh8gnOfZRps7f10YAg
Shaukat Tarin
@shaukat_tarin
Private credit off take reported at Rs. 911 billion from July to March 11, 2022, vs Rs. 357 billion for same period last year. The substantial increase is indicating robust economic activity. Meanwhile, GoP has retired Rs. 291 billion to SBP, creating room for private sector.
https://twitter.com/shaukat_tarin/status/1507621486055628802?s=20&t=UgybLKwTEj7ybz3yT2XauQ
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Private sector borrowings swell to Rs911bn
https://www.dawn.com/news/1681884/private-sector-borrowings-swell-to-rs911bn
KARACHI: The private sector credit off-take jumped by 155 per cent to Rs911 billion during the July-mid March period compared to Rs357bn in the same period of last fiscal year, data shared by the State Bank of Pakistan (SBP) showed on Friday.
The increase in borrowings indicates higher economic activities that could lead to achieving the growth target set by the government.
The increase in terms of percentage is the biggest growth in the last five years while it has already crossed the total private sector credit off-take witnessed in FY21 when Rs766bn was borrowed. Initially, growth was announced at 3.9pc but later it was reviewed by National Accounts Committee which found the growth as 5.37pc in FY21. It was unexpected for most analysts and economists and the growth rate was termed as surprising.
The SBP in its last monetary policy predicted that the economic growth rate could be in the mid of 4-5pc for FY22 which is encouraging for the government facing challenges of Covid-19 pandemic, record oil and commodity prices and huge traded deficit.
The higher oil prices and costly imports increased inflation ultimately forcing the SBP to increase interest rate which is currently at 9.75pc. Despite costly borrowings, the private sector kept increasing its economic activities which are reflected from the credit off-take during FY22.
The conventional banks were at the forefront as they extended loans worth Rs567bn to the private sector during this period which was much higher than Rs174bn credit off-take during the same period in FY21.
The Islamic banks also increased their lending to the private sector but the size of the increase was much less than conventional banks. The lending to the private sector by Islamic banks reached Rs127bn during this period compared to Rs71bn in the same period in FY21.
The lending to the private sector by Islamic branches of the conventional banks was double than the previous fiscal year. These branches extended loans worth Rs217bn compared to Rs111bn in the same period in FY21.
The current private sector credit off-take has surpassed the total loans extended in the entire FY21. In the previous fiscal year, the private sector credit off-take was Rs766bn.
Some banking analysts believe that the private sector is getting higher loans due to low intake by the federal government from the banking system while deposits also increased this year.
This created higher liquidity for the banks, forcing them to lend maximum to the private sector.
Egypt’s Paymob to Start Pakistan Operation to Tap Growing Market
https://www.bloomberg.com/news/articles/2022-04-12/egypt-s-paymob-to-start-pakistan-operation-to-tap-growing-market
Egypt’s digital payments provider Paymob plans to start its operations in Pakistan this month, taking advantage of a market that has seen a funding frenzy in its startups.
The Cairo-based company, which allows online businesses and offline merchants to accept and send payments, sees a significant opportunity in Pakistan, Islam Shawky, CEO and co-founder of Paymob, said in an interview. The company plans to have 100,000 merchants in its first two years in Pakistan, he said and added it currently operates in Egypt, Jordan and Kenya and aims to enter Saudi Arabia later this year.
SBP
@StateBank_Pak
1/2 #SBP issues Q2FY22 report on Payment Systems that shows encouraging growth in digital banking. Overall e-banking transactions volume grew by 10.7% to 400mn whereas value by 22.8% to over Rs33tn. During CY2021 volume increased by 41% to 1.4bn and value by 45% to Rs106tn.
https://twitter.com/StateBank_Pak/status/1514900441657655301?s=20&t=wnP0FUBlc3dAZ7FVn71wTg
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2/2 Mobile banking volume were up by 18.8% & value by 35.4%. Similarly, internet banking volume increased by 13.9% & value by 28%. See PR:
https://www.sbp.org.pk/press/2022/Pr-15-Apr-2022.pdf
Egypt-based fintech Paymob has partnered with Pakistan-based Bank Alfalah for digital payments acceptance across Pakistan.
https://thepaypers.com/online-payments/bank-alfalah-partners-with-paymob-for-digital-payments-in-pakistan--1255813
The fintech has signed an agreement with Bank Alfalah to activate and support merchant acquisition and integration services across the country. This collaboration will enable an instant onboarding feature in Pakistan using Paymob’s solutions such as payment gateway integration, POS terminals, and SoftPOS.
The instant onboarding feature is supported by the digital onboarding regulations recently published by the State Bank of Pakistan and comes as one of the steps the State Bank has led to enable MSME merchants in order to further digitise the ecosystem.
The partnership follows the launch of Paymob’s ‘Tap-on-Phone’ payment acceptance mechanism in Egypt. The Tap-on-Phone service will also be accessible for Pakistan-based merchants, enabling them to use mobile phones directly to service payments. The company aims to onboard over 100,000 merchants across Pakistan, until 2024, and improve ecommerce acceptance for online merchants.
The market opportunity in the country is increased given the range of retail outlets and SME businesses across the country’s cities. With over 4 million SMEs using just over 80,000 POS terminals and less than 3000 ecommerce payment gateways, the market is suited to meet Paymob’s criteria and strategy to expand globally, and bridge the digital financial gap, according to the press release.
Pakistan to launch digital ID wallet this year
By Daniel Tost - March 8, 2022, 6:19 pm
https://www.globalgovernmentfintech.com/pakistan-to-launch-digital-id-wallet-this-year/
Pakistan’s National Database and Registration Authority (NADRA) is planning to roll out a digital identity wallet later this year in a move that will end the need for physical ID.
NADRA is tasked with digitising all citizen data in the country, which – with more than 220 million citizens – is the fifth biggest in the world in terms of population.
As part of a digital push aimed at generating benefits including greater financial inclusion, the authority is working on a significant evolution of the existing ‘Pak-ID’ smartphone app – which was itself only introduced seven months ago, the authority’s chairman Tariq Malik told Pakistani media Dawn.
Launched last September, Pak-ID allows citizens to apply for a physical ID card remotely by using their Android or iOS device to scan documents and biometric data including their fingerprints and take a picture to verify their identity. When it was introduced, NADRA proclaimed that Pakistan had become ‘the first country in the world to introduce ID technology’. Two weeks later, the authority launched a similar biometric verification service for the banking and payments industry. With five banks initially participating, the service enables customers to open bank accounts and undertake biometric authenticated financial transactions using a mobile-phone camera.
Hailing Pak-ID’s debut, prime minister Imran Khan called the app “a revolutionary step in providing convenience, especially to overseas Pakistanis”. It seems these expats have at least partly driven the decision to launch the digital identity wallet by updating the Pak-ID app. “In a short span, 75,000 overseas Pakistanis have processed their national identity cards from the comfort of their homes by using the app,” Malik told Dawn. “With successful testing on 75,000 overseas Pakistanis, NADRA will go for a digital wallet.”
The wallet would be “a leap forward putting an end to the conventional physical ID” and is to be made available “later this year”, Malik said. “The digital dividends of such technology innovation will yield positive results in contactless banking, financial inclusion, ease of doing business and e-governance initiatives by offering remote identification and e-KYC [know-your-customer procedures].”
SBP
@StateBank_Pak
Another milestone achieved by #SBP in the journey of digitization, as number of #Raast IDs registration crosses 10 million mark since its launch in Feb22. Aggregated value of Person to Person (P2P) Transactions using #Raast system by customers crosses Rs36bn.
https://twitter.com/StateBank_Pak/status/1526174517910986755?s=20&t=aqY9b05RSGuFWfapw2ib7w
NADRA Launches Digital Payment System to Replace ATM
NADRA (National Database and Registration Authority) just recently announced the arrival of its new e-payment system which is proclaimed as the final blow to ATM usage around the country. Claimed to be the replacement for ATMs, the e-payment solution will allow users to make easy electronic payments.
Alongside NADRA, 1Link also played an important role in building the e-payment solution. Once widely in use, this will be Pakistan’s biggest and most fully accredited payment gateway system. NADRA adds this new venture into its already successful catalog of solutions named as ‘e-sahulat’.
https://www.techjuice.pk/nadra-launches-digital-payment-system-to-replace-atm/
With the launch, NADRA will start its mission of transforming over 17,000 e-Sahulat locations into full-featured ATMs. These locations will then also provide users with a number of different online payment options.
NADRA Chairman Tariq Malik and 1Link CEO Najeeb Agrawal signed the contract on Monday. Chairman Malik on the occasion said that NADRA for a long time has been trying to enhance its e-governance services by empowering organizations from both the public and private sectors.
““We are enhancing state capacity to deliver digital public goods and move towards electronic financial transactions for transparency and accountability. This would enable financial inclusion as well.” said Malik about the new e-payment solution.
Malik in his speech also claimed for NADRA’s e-sahulat is the most cutting-edge digital service for financial payments. Now with an e-payment solution coming into play, around 17,000 NADRA e-sahulat centers will be able to quadruple their capacity.
According to NADRA, we will soon see the e-payment platform in rural areas of Pakistan as well. Now, this is a great initiative since it will allow ease of business and increase rural contribution to the digital economy.
5G technology to be launched next year
https://www.nation.com.pk/06-Dec-2022/5g-technology-to-be-launched-next-year
The Ministry of Information Technology and Telecommunication is likely to launch 5G technology next year in the country to cope with the challenges of the digital world. The official of ministry of IT and telecommunication said that the provision of broadband services across the country was the topmost priority of the ministry of IT. He said that the ministry of IT through the Universal Service Fund (USF) had launched some 70 projects of optical fiber cable (OFC) and broadband infrastructure development in four provinces at a cost of Rs 65 billion. “All projects are underway in far-flung areas would be completed by June next year,” he added. “In the province of Sindh alone, 20 projects of NGBSD and OFC worth Rs16.3 billion have been started so far in 20 districts, including Tharparkar, Nawabshah, Khairpur, Larkana, Badin, Jacobabad, Shikarpur, Mirpurkhas, and Dadu,” the official said. He said that projects of connectivity of the un-served and underserved communities of Balochistan, Punjab, and Khyber Pakhtunkhwa (KP) provinces had also been launched. He said, through USF aimed to connect all the citizens of the country as digitalisation had become a priority for businesses and communities. Under its Next Generation Optic Fiber (NG-OF) Network and Services programme, USF had contracted over 16,000km of Optic Fiber Cable (OFC) to benefit 31.5 million populations across the country.
Mobile banking doubles, internet banking grows by 51.7% in FY2021-22
As internet banking, POS, and eCommerce transactions post strong growth, the digital payments ecosystem is picking up steam
https://profit.pakistantoday.com.pk/2022/12/23/mobile-banking-doubles-internet-banking-grows-by-51-7-in-fy2021-22/
https://www.sbp.org.pk/PS/PDF/FiscalYear-2021-22.pdf
The past fiscal year has seen a massive increase in the size of the digital payments ecosystem, the State Bank of Pakistan’s (SBP) Annual Payment Systems Review for 2021-22 revealed. The report says that mobile phone banking increased by 100.4% to 387.5 million, while internet banking grew by 51.7% to 141.7 million during the year.
The impressive numbers come on the back of an important year for the ecosystem that saw a number of milestones. With the SBP backed Raast getting traction, and electronic money institutions (EMIs) gaining popularity among customers, the signs are pointing towards money quickly becoming digital. Cash transactions have also gained momentum with ATM networks proliferating and cash withdrawals from ATMs also posting double digit growth over last year.
The tools for growth
By value, mobile phone banking and internet banking grew strongly by 141.1% and 81.1%, thus, reaching to Rs11.9 trillion and Rs10.2 trillion respectively. Ecommerce transactions also witnessed similar trends as the volume grew by 107.4% to 45.5 million and the value by 74.9% to Rs106 billion.
During FY22, a total of 32,958 Point of Sales (POS) machines were deployed in the country which led to an expansion of its network by 45.8% to 104,865. The total number of transactions through POS, 137.5 million, were 54.5% higher than previous fiscal year with transaction value reaching Rs0.7 trillion growing by 56.1%.
E-commerce merchants registered with the banks increased to 4,887 in FY21-22, from 3,003 merchants during the previous year. In continuation of its efforts to promote and enhance the digital payment system in the country, SBP launched Raast Person-to-Person (P2P), which enabled payments among individuals, businesses and other entities to settle transactions in real-time. According to the report, as of June-22, there were 15 million registered P2P Raast users, carrying out 7.9 million transactions amounting to Rs 102.1 billion in value. Raast was launched in November last year.
The number of large-value transactions through the Real-Time Gross Settlement (RTGS) system of Pakistan reached 4.37 million by FY22 amounting to Rs 681.6 trillion with an annual growth of 53.3% in value. During FY22, paper-based transactions declined by 1.0% in volume though its value grew to Rs 190.4 trillion, almost 25.6% higher than last year.
According to the State Bank’s Annual Payment Systems Review, the number of conventional bank account holders increased by 4.5 million, from 63 million account holders in 2021 to 67.5 million in 2022. On the other hand, branchless banking accounts increased from 74.6 million to 88.5 million, a growth of 18.6%.
Give me the cash, but digitally
Considering cash transactions are still predominant, the ATM network in Pakistan needs to be strong to cater to needs. The ATMs network in the country also grew by 4.8% during the year reaching 17,133 ATMs.
A total of 692.3 million transactions were carried out through ATMs which amounted to Rs 9.6 trillion, 19.2% higher than FY21. Meanwhile, cash withdrawals from ATMs picked up from 577.3 million in volume and Rs7.29 trillion in value in 2020-21, to 670.6 million in volume and Rs8.6 trillion in value. That’s a growth of 16.1% in volume and 18% in value over the previous year.
Plastic money on my mind
There were 42.4 million payment cards in circulation in FY22 including 71.1% or 30.16 million debit cards; 24.3% or 10.3 million social welfare cards; 4.2% or 1.79 million credit cards and the rest were pre-paid and ATM only cards.
Banks’ income, assets flourish in 1HCY22
https://www.dawn.com/news/1723769
https://www.sbp.org.pk/press/2022/Pr-28-Nov-2022.pdf
Banking in Pakistan flourished during the first half of the calendar year 2022; both assets and income noted a strong increase while the balance sheet of banks expanded by 16 per cent over the same period of last year.
The State Bank issued a “mid-year performance review” (MYPR) of the banking sector for 2022 on Monday.
The review covers the performance and soundness of the banking sector for the January-June period (1HCY22).
It also covers the performance of financial markets and microfinance banks (MFBs), as well as the results of Systemic Risk Survey (SRS), which represents independent respondents’ views about key risks to financial stability.
The sustained economic activity during 1HCY22 supported the expansion of banking sector balance sheet by 16pc during 1HCY22, said the report.
A robust increase in the asset base was mainly driven by the flow of private sector advances and increases in investments, particularly government securities, said the report.
Investments rose by 22.5pc (Rs3.3 trillion) during 1HCY22. “These funds were almost entirely invested in government securities,” said the SBP report.
Investments in MTBs (market treasury bills) and PIBs (Pakistan Investment Bonds) observed a rise of Rs684 billion and Rs1.7tr, respectively.
Also, Ijara Sukuk attracted substantial bank funds of Rs838 billion in the first half of the present calendar year. Accordingly, the share of MTBs in banks’ total holding of federal government securities declined to 33.6pc by the end of June this year from 46.6pc a year ago. The share of PIBs shot up to 52.6pc from 46pc in June -2021.
“Increased share of long-term investments demonstrates the government’s strategy to improve its debt maturity profile,” said the SBP. The pace of growth in private sector advances during 1HCY22 was the highest in comparable periods of the previous three years. Improved manufacturing activity, as reflected in double-digit growth in the Large-Scale Manufacturing (LSM) index during 1HCY22, higher input prices and SBP’s refinance schemes augmented the overall flow of advances.
Individuals and the sugar sector availed a major chunk of financing, followed by the textile sector.
However, the monetary policy announced on Nov 24 had said that in line with the slowdown in economic activity, private sector credit continued to moderate, increasing only by Rs86.2 billion during Q1 FY23 (July 1 to Sept 30, 2022), compared to Rs226.4 billion during the same period last year.
This deceleration was mainly due to a significant decline in working capital loans to wholesale and retail trade services, as well as to the textile sector in the wake of lower domestic cotton output, and a slowdown in consumer finance, said the monetary policy.
PostEx acquires Call Courier to become Pakistan’s largest e-commerce service provider
https://techcrunch.com/2022/08/29/postex-acquires-call-courier-to-become-pakistans-larger-e-commerce-service-provider/
Pakistani fintech PostEx has acquired logistics service provider Call Courier, creating what it describes as the largest e-commerce service provider in the country. PostEx will now serve 1.3 million users with over 8,000 merchants across 500 cities in Pakistan, and is on track to having a monthly loan book of more than $12 million.
The acquisition means that Call Courier will become a whollyowned subsidiary under the group name. PostEx provides services like upfront payments in a country where more than 90% of e-commerce payments are still completed in cash, and revenue-based financing for e-commerce sellers and SMEs.
PostEx co-founder and CEO Omer Khan told TechCrunch that according to the World Bank, about 100 million adults in Pakistan don’t have a bank account. As a result, businesses have limited access to working capital and lack adequate cash flow. On the other hand, consumers are wary of digital transactions, and even many who have bank accounts still prefer to pay cash on delivery for items ordered online.
But cash on delivery is problematic for e-commerce businesses because they have a higher rejection rate at the door. Furthermore, funds from cash on delivery purchases often take up to two to three weeks to be deposited into a business’ banking account, compared to a few days for digital payments.
As a result, PostEx’s founding team decided there was potential to build a reliable logistics service provider, plus upfront cash. Upfront payments mean that online vendors no longer have to wait through long payment cycles, and have better cash flow.
“We’re out there making it simpler for businesses to reach out to more customers, take care of their delivery needs and provide them with upfront liquidity,” said Khan. “This is essential for smaller businesses that need every penny to sustain themselves.”
In terms of competition, Khan says PostEx’s novelty factor is its hybrid of fintech and logistics. It has raised $8.6 million to date, and its backers include Zayn Capital, Global Founder Capital, MSA Capital, RTP, FJ Labs and Shorooq.
In a statement, Senator Afnan Ullah Khan, a member of the Prime Minister’s IT Task Force Committee said, “This acquisition shows the importance of close collaboration between fintech and logistics highlighting the importance of access to capital. This acquisition makes PostEx the largest e-commerce service provider in the market, showing the potential of startups for challenging incumbents. It’s refreshing to see new solutions to old problems.”
The first fintech service in Pakistan was introduced in 2009 by telecom company, Easypaisa. At first, the service only provided money transfers. However, it has since introduced a mobile app that offers a wide range of financial services, making it Pakistan's first fintech platform.
https://www.forbes.com/sites/forbesbusinesscouncil/2023/08/17/the-fintech-startup-environment-in-pakistan-from-idea-to-execution/?sh=2bdee2d272bc
Now, Pakistan has a wide range of mobile financial services (MFS). Their usage level is significant because these services allow individuals to set up a mobile money account using their SIM number. Mobile financial services are convenient and offer essential financial services such as money transfers and bill payments. These services do not have any physical banks but instead rely on agents (vendors) nationwide.
Banks often provide their users with an online banking experience either by creating a portal or an app. However, only a few bank MFS apps enable customers to perform financial transactions while others simply provide information on a user’s financial status.
Fintech Startups: Neobanks
Even though the existing services offer a decent mobile financial experience to their users by taking care of basic needs, this is not fintech at its true scale. Pakistan has seen a significant increase in fintech startups in recent years. These neobanks operate entirely online without any physical banking network. They allow users to open a bank account, make instant payments, transfer money, pay bills and create virtual cards.
However, the question remains, what are the keys to a successful fintech startup in Pakistan?
Challenges Faced By Fintech Startups In Pakistan
1. Market Saturation And Limited Investment
The fintech market is already filled with incumbent organizations. These organizations are not always welcoming of innovation, which is an issue for upcoming fintech companies trying to find partnerships or investments.
And since most of the fintech services in Pakistan are owned by well-established banks or telecommunications companies, almost all funding and investments are directed toward them, leaving fintech startups with limited venture capital and funding opportunities.
2. Poor Financial Inclusion
Pakistan's financial inclusion status is below average, ranking 16th out of 26 countries in a Brookings report. Despite 80% of financial services being provided by the banking sector, they serve only 15% of the population, which is a significantly low percentage.
A survey by the State Bank of Pakistan revealed that basic financial literacy is possessed by only 23% of Pakistan’s population. The World Bank states that about 100 million adults in Pakistan are not even aware of the regulated financial services provided in the country. This number represents 5% of the world’s 2 billion unbanked people.
3. Unreliable Infrastructure
The digital infrastructure in Pakistan also needs to be improved. A clear example is the nationwide internet blackouts, which make internet services in Pakistan unreliable. This uncertainty and unreliability of the internet can disrupt transaction processing and service delivery. Payment services like Paypal are also nonexistent in Pakistan, which shows the massive lack of digital payment infrastructure in Pakistan’s cash-based economy.
4. Regulatory Failures
Despite implementing regulations such as the Regulations for Mobile Banking Interoperability and creating the Third Party Service Provider (TPSP) License that highly favor fintech startups, not all policies by Pakistan's government are friendly to fintech advances; a clear example of this is the 2018 ban on cryptocurrency trading and mining.
Who owns Pakistan’s digital wallet throne? - Profit by Pakistan Today
https://profit.pakistantoday.com.pk/2024/07/15/who-owns-pakistans-digital-wallet-throne/
In 2008, a seismic shift occurred in Pakistan’s financial services landscape with the introduction of Branchless Banking (BB). This innovation sparked a digital revolution, reshaping how millions of Pakistanis access and use financial services. By the end of 2023, this transformation had reached new heights, with BB accounts soaring to 114 million—an 18.1% increase from the previous year. Even more striking, active accounts surged by 50.9% to 64.1 million, underscoring the growing adoption of digital financial solutions.
At the heart of this digital finance boom are two titans: Telenor Bank’s Easypaisa and Mobilink Bank’s JazzCash. These digital wallets have become household names, each carving out a significant portion of the market. While JazzCash leverages its vast customer base and market reach, Easypaisa, as a pioneer, boasts an extensive network of agents and merchants. Their rivalry not only fuels innovation but also raises a compelling question: In this rapidly evolving landscape, who truly leads the digital wallet revolution in Pakistan?
Both companies claim market leadership. VEON’s 2023 annual report states, “JazzCash was the largest domestic fintech platform and the most popular mobile fintech application in Pakistan.” Conversely, Telenor Bank’s annual report asserts, “The bank continued to solidify its position as a leading player in Pakistan’s digital financial sector in 2023.”
Given these competing claims, how can we determine which company truly leads the market?
History of Easypaisa and JazzCash
The advent of branchless banking in Pakistan can be traced back to the mid 2000s. We had Tameer Bank (Now rebranded as Telenor Bank) which was suffering from high delinquencies and was looking for a way out. As fate would have it, SBP was also looking to introduce the branchless banking regime in the country.
Visa aims for 10-fold rise in Pakistani use of digital payments | Reuters
https://www.reuters.com/business/finance/visa-aims-10-fold-rise-pakistani-use-digital-payments-2024-09-11/
Visa targets 10-fold rise in Pakistan's digital payment acceptance
Partnership with 1Link to enhance remittances and payment security
IMF deal and regional policies support Pakistan's digital payment
KARACHI, Sept 11 (Reuters) - Visa (V.N), opens new tab plans to increase the number of businesses accepting digital payments in Pakistan tenfold over the next three years, the payments giant's general manager for Pakistan, North Africa and Levant told Reuters.
The comments from Leila Serhan came as Visa announced a strategic partnership with 1Link, Pakistan's largest payment service provider, aimed at streamlining remittances into the South Asia country and also encouraging digital transactions.
Pakistan, with a population of 240 million, is home to one of the world's largest unbanked populations. Only 60% of its 137 million adult population, or 83 million adults, have a bank account, based on central bank estimates.
Visa is investing in building digital payment infrastructure in the country, aiming to make digital payments less costly and more manageable.
Currently, Pakistan has 120,541 point of sales (POS) machines, according to central bank data.
Visa intends to significantly increase this number. "Some businesses have more than one POS machine. We're aiming at ten-folding businesses' acceptance (of digital transactions)," said Serhan.
The strategy involves technology that transforms phones into payment instruments and accepting various forms of payment, including QR and card tap. Visa aims to expand beyond large cities and mainstream businesses to include smaller merchants.
The 1Link deal aims to improve the process for sending and receiving remittances, including bolstering payments security, boosting such transactions via legal channels.
As one of the top remittance recipients globally, Pakistan relies heavily on funds from overseas Pakistanis, which constitute a vital source of foreign exchange and significantly contribute to the country's GDP.
"We're really looking forward to finishing this technical integration in the coming months, and I think it's going to be a game changer for a lot of the consumers in Pakistan," said Serhan.
The partnership with 1Link will also enable 1Link's PayPak cards to be accepted on Visa's Cybersource Platform for online transactions, despite PayPak being a competitor in digital payments.
Pakistan signed a $7 billion bailout deal with the International Monetary Fund in July, which includes reforms such as raising revenue and documenting the economy.
"Digital payments are going to be at the heart of what the government wants to do from a digitization perspective, and we will continue to partner with them," Serhan said.
Visa’s Leila Serhan says Pakistan presents significant opportunity for digital payments
https://www.thenews.com.pk/print/1234879-visa-s-leila-serhan-says-pakistan-presents-significant-opportunity-for-digital-payments
KARACHI: Senior Vice President and Group Country Manager for North Africa, Levant and Pakistan (NALP) at Visa Leila Serhan highlighted the importance of cybersecurity measures in promoting the growth of digital payments in Pakistan during an interview with The News.
Following are excerpts of her conversation:
Q: What initiative is Visa taking to safeguard users and support partner banks to combat fraud and cybercrime in Pakistan?
A: Cyber security is a top priority for anyone in the financial services industry, especially for Visa. We provide cutting-edge artificial intelligence-powered risk and fraud management solutions to our users and partner financial institutions, which greatly assist in every step of the transaction process.
The technologies like tokenization not only enhance user experience but also strengthens security by converting the 16-digit card number into a token, significantly improving security. Visa aims to introduce tokenization technology to all its partners and the entire ecosystem to safeguard consumer data.
In Pakistan, security and fraud issues, such as social engineering, are common when making digital payments. Therefore, there is a need to educate users not to share their online transaction processing data or card information via email. Furthermore, the user card verification value is confidential and should not be shared with anyone.
Visa recently announced a strategic partnership with 1Link, the country’s largest payment service provider, to simplify remittances in the country and promote digital transactions. The partnership involves integrating the Visa Alias Directory Service within the 1LINK network to streamline incoming remittances, enhance user experience and protect sensitive payment credential information.
Remittances are crucial for the Pakistani economy, as the country is one of the top 10 remittance-receiving nations in the world, according to World Bank data. Visa has simplified the remittance process, allowing individuals whether in the United Arab Emirates, Saudi Arabia or any other market to send money back home to their parents or family using a mobile number. The Visa Alias directory facilitates fast and secure transactions, and users can conveniently send and receive money directly from their mobile phones.By providing a seamless user experience and ensuring convenience, security, and cost-effectiveness in remittance transactions, efforts are made to discourage the use of illegal remittance flows to the country. This is one of our key objectives.
Q: What efforts is Visa making to increase the acceptance of contactless payments by small businesses?
A: We are collaborating closely with banks and other stakeholders to offer customized financial products and low-cost acceptance solutions, enabling small and medium enterprises (SMEs) to accept payments in a cost-effective manner. Tap-to-phone is a key part of our strategy, and we aim to expand the reach of small and micro enterprises able to accept digital payments by 10 times. We are forming numerous partnerships to promote financial literacy, expand small businesses and enhance consumer financial inclusion.
Q: How does Visa collaborate with government entities like the State Bank of Pakistan?
A: We have had a very positive dialogue with the State Bank of Pakistan. It is great that there is an active dialogue and partnership between the government and companies like Visa in the private sector. We constantly discuss how to improve the consumer experience in Pakistan, both domestically and internationally.
This e-banking platform is narrowing Pakistan's financial gap | World Economic Forum
https://www.weforum.org/videos/edisonalliance-pakistan/
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https://www.sbp.org.pk/Finc/AMAscheme.html
Through the Asaan Mobile Account (AMA) platform, any Pakistani holding a valid CNIC can open a bank account digitally in any AMA participating bank, from anywhere, at any time by using the SIM of any mobile operator. The scheme allows individuals to access AMA platform using a short code i.e *2262# and make transactions, through their basic/smart mobile phone without the need for internet connectivity.
Asaan Mobile Account (AMA) platform is a revolutionary initiative undertaken by State Bank of Pakistan (SBP) and Pakistan Telecommunication Authority (PTA), in collaboration with branchless banking (BB) providers, telecom operators and other development partners. The AMA platform has been launched under the National Financial Inclusion Strategy (NFIS) that aims to facilitate general masses, especially the low income segments, to digitally open their BB accounts and use the available financial services in a swift, easy and affordable manner.
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