Showing posts with label Raast. Show all posts
Showing posts with label Raast. Show all posts

Friday, July 19, 2024

Pakistan's Digital Public Infrastructure (DPI) Initiative Transforming Lives

Pakistan's journey to build a digital public infrastructure (DPI) began in March 2000 with the establishment of NADRA, the National Database and Registration Authority. The Gates Foundation defines DPI as follows: "DPI is a digital network that enables countries to safely and efficiently deliver economic opportunities and social services to all residents. DPI can be compared to roads, which form a physical network that connects people and provides access to a huge range of goods and services...... strong DPI has three foundational systems—identity, payments, and data exchange—that together can make life easier in important ways". 


Digital Public Infrastructure. Source: World Economic Forum


Transformational Impact:

An article recently published on the World Economic Forum website sheds light on how Pakistan's digital public infrastructure is transforming lives in rural Pakistan. Here's how it begins: 

"On a scorching day with temperatures soaring to 42 degrees, Manzoora, a mother from the flood-stricken district of Shaheed Benazirabad, rural Sindh, Pakistan, made a significant leap: she withdrew cash from her own bank account for the very first time. This milestone was made possible through a mobile cash transfer programme initiated by the Sindh government, which partnered with digital service providers to empower citizens like Manzoora. This is just one example of how DPI is changing the lives of millions of Pakistanis". 

An earlier UNDP report  titled "DigitAll: What happens when women of Pakistan get access to digital and tech tools? A lot!" written by Javeria Masood has also described the socioeconomic impact of technology in Pakistan in the following words:

"The world as we know it has been and is rapidly changing. Technology has proven to be one of the biggest enablers of change. There has been a significant emphasis on digital training, tech education, and freelancing in the last several years especially during the pandemic, through initiatives from the government, private and development sectors. Covid-19 acted as a big disrupter and accelerated the digital uptake many folds. In Pakistan, we saw the highest number of digital wallets, online services, internet-based services and adaptability out of need and demand". 

Digital Identity: 

NADRA launched Computerized National Identity Card (CNIC) the same year it was established. It uses biometric data and personal information to confirm the identity of the cardholder as a citizen of Pakistan. The CNIC card is used across the country for voting in elections, opening bank accounts, issuing passports, getting driver's licenses, registering marriages and divorces, completing real estate transactions, participating in social safety net programs like Benazir Income Support, obtaining mobile phone numbers/sims, purchasing tickets for airlines and railways, etc etc. 

The introduction of CNIC was a "foundational change, positioning Pakistan among a select group of nations equipped to manage comprehensive digital identities for over 240 million citizens", according to the World Economic Forum. Within four years of launching the Benazir Income Support Program (BISP) – a social protection initiative to alleviate poverty – CNIC issuance to adults increased by 72%. 


Pakistan Instant Payment System. Source: State Bank of Pakistan


Payments:

Digital identity enables payments from the government to citizens as well as financial transactions among individuals, businesses and government entities. The introduction of RAAST, an instant low-cost payment system launched in 2021 by the State Bank of Pakistan, has spurred digital payments in the country.  It seamlessly and securely connects government entities, a variety of banks, including microfinance banks (MFBs),  electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs). 

QR Codes: 

This year, the State Bank of Pakistan has launched P2M (Person to Merchant) services. These allow people with electronic wallets in their mobile phones to pay for goods and services using merchants' QR codes. “The P2M service will enable payment acceptance by businesses using quick response (QR) codes, Raast Alias, IBAN and request to pay (RTP),” the Central Bank said in an announcement. 

"All REs (regulated entities) shall enable…capabilities for processing P2M transactions via their delivery channels including mobile apps, internet banking portals and USSD channels (where applicable) by March 01, 2024." The central bank asked Raast merchant service providers (MSPs) to ensure that customers are not charged any fee on their purchases, by merchants or third parties.

"MSPs may…charge a reasonable fee from merchants for the services provided; however, they are encouraged to initially waive off such charges to promote merchant adoption."

RAAST Uptake:

Raast, the State Bank of Pakistan's Instant Payment System, is playing an important role in facilitating free, convenient and secure real-time transactions across the country, according to a report published by the State Bank of Pakistan. During Q3 of FY24,  Raast processed 140 million transactions totaling Rs. 3,437 billion.

Digital transactions took center stage in Pakistan's financial landscape during Q3 FY 2023-24, capturing a commanding 83% of 844 million total retail payments processed by Banks and Electronic Money Institutions (EMIs), while the remaining 17% were Over-the-Counter (OTC) transactions at banks’ branches, reports Mettis Global. 

Pakistan National Socioeconomic Registry. Source: Maintains

National Socioeconomic Registry:

The National Socio-economic Registry has been created . It will be regularly updated to keep it current and deliver services to the Pakistanis most in need. The effort started in earnest in 2020 to hand out Rs. 12,000 per family to 3 million most affected by the COVID19 lockdown. Here's how a Pakistani government website describes the digital registry architecture:

"The Cognitive API architecture for Ehsaas’ National Socio-Economic Registry 2021 is one of the six main pillars of ‘One Window Ehsaas’. With the survey, which is building the registry currently 90.5% complete nationwide, Ehsaas is firming up its plans to open data sharing and data access services for all executing agencies under the Poverty Alleviation and Social Safety Division (PASSD). Data sharing will be done through the Cognitive API Architecture approach. The deployment of Ehsaas API architecture for data sharing will allow executing agencies to access data from the unified registry in real-time to validate beneficiary information. This will empower them to ascertain eligibility of potential beneficiaries". 

DPI Future Plans:

In future, Pakistan is set to launch several ambitious DPI initiatives, including expanding the RAAST payment system, implementing a nationwide digital health records system, and launching a blockchain-based land registry. These projects promise to drive efficiency and transparency across multiple sectors, positioning Pakistan as a pioneer in the global digital landscape, according to a report by the World Economic Forum. 


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Sunday, February 20, 2022

Digital Transactions in Pakistan Soared 30% to $500 Billion in Fiscal Year 2020-21

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. 


It has been developed in-house by the State Bank of Pakistan  in collaboration with Karandaaz, Bill & Melinda Gates Foundation and supported by the World Bank, the British government and the United Nations.

Private Payment Apps:

Several private payment apps, including EasyPaisa and JazzCash, are already operating in Pakistan. These apps lack interoperability with each other. Each operates in its own silo. Neither of these offer links to financial institutions and government entities. 

There are also several EMIs (Electronic Money institutions) in Pakistan. These include NayaPay, SadaPay and Finja.  EMIs are not banks, but can store deposits. These are not tied to any banks or telcos. They could all use back-end plumbing offered by Raast. 

Payment Service Providers (PSPs) :

1Link and NIFT payment and switch networks, supported by different groups of Pakistani financial institutions, currently process the bulk of credit/debit card and ATM transactions as well as e-payments in Pakistan. State Bank's Raast promises to be cheaper and faster than these networks. Raast also offers processing of e-payments by government entities. 

Raast Future Roadmap:

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. 


Summary:

Digital transactions in Pakistan soared 31% to $500 billion in FY 2020-21. Among the factors driving rapid shift to digital technology are: 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.  State Bank of Pakistan's launch of Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

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Saturday, January 23, 2021

Raast Aims to Create Pakistan's Unified Digital Payments Infrastructure

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. 


It has been developed in-house by the State Bank of Pakistan  in collaboration with Karandaaz, Bill & Melinda Gates Foundation and supported by the World Bank, the British government and the United Nations.


Private Payment Apps:

Several private payment apps, including EasyPaisa and JazzCash, are already operating in Pakistan. These apps lack interoperability with each other. Each operates in its own silo. Neither of these offer links to financial institutions and government entities. 

There are also several EMIs (Electronic Money institutions) in Pakistan. These include NayaPay, SadaPay and Finja.  EMIs are not banks, but can store deposits. These are not tied to any banks or telcos. They could all use back-end plumbing offered by Raast. 

Payment Service Providers (PSPs) :

1Link and NIFT payment and switch networks, supported by different groups of Pakistani financial institutions, currently process the bulk of credit/debit card and ATM transactions as well as e-payments in Pakistan. State Bank's Raast promises to be cheaper and faster than these networks,. Raast also offers processing of e-payments by government entities. 

Raast Future Roadmap:

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. 


Summary:

State Bank of Pakistan's launch of Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

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