Pakistanis fast adopting digital transactions

Number increases 17% in 2016-17, says central bank in performance review

KARACHI: Pakistan is fast moving towards adopting digital modes of payment with the number of electronic transactions registering a 17% year-on-year growth in 2016-17, stated the central bank in its annual performance review.

With the advent of mobile broadband technology, Pakistan has witnessed a surge in digital adoption with a number of ecommerce businesses as well as online methods of conducting payments deriving immense benefit.

Internet and mobile banking emerged on the horizon while ATM machines remained king of the ring in an otherwise, cash-based society.

“Following the global trends, the payment systems landscape in Pakistan has also transformed rapidly during last 6-7 years with stellar growth in payment cards, mobile, internet banking transactions,” the State Bank of Pakistan (SBP) said in the annual performance review.



Banks, businesses and consumers in the country made a total of 625.8 million transactions via electronic banking channels worth Rs37.1 trillion in fiscal year 2017.

This number is 17% higher than 543.8 million transactions conducted in the prior year. However, the value of transaction remained flat.

Commercial banks, via their real-time online branches (RTOB), deposited and withdrew cash and transferred funds through intra-bank facility worth Rs31.1 trillion during the year via 143.6 million transactions during the year.

“Rs31.1 trillion...was 23% of total e-banking transactions by volume and 84% by value,” the central bank said.

Internet banking increased 32% to 25.2 million transactions worth around Rs969 billion in fiscal year 2017. Mobile phone banking surged 12% to 7.4 million transaction valuing Rs141 billion in the year.

“The initiation of projects like the development of National Payment Gateway, online collection of taxes and duties and elimination of cheques from government payments will have far reaching implications on banking system efficiency, effectiveness and access,” SPB said.

Some 25 banks offered internet and call centers/IVR (interactive voice response) banking services, while 18 banks dealt in mobile phone banking as on June 2017.

On the contrary, paper-based (cheques, pay orders, demand drafts and others) transactions were recorded at 451.8 million valued at Rs139.6 trillion in the year.

King of the ring

“ATMs are the most frequently used channel for withdrawal of cash,” the SBP said in the report.

A total of 397.7 million transactions were processed on ATMs valued at around Rs4.6 trillion.

“During Ramazan and the ensuing Eidul Fitr holidays in 2017, a total of Rs442 billion were withdrawn through ATMs,” it said.

A total of 32 banks operate 12,689 ATMs across the country as on June 30, 2017. This was a growth of 11.5% in one year.

Call centre banking fading

As the use of internet and mobile banking goes up, the use of call centers/ IVR (interactive voice response) banking has shown a fall, with a negative growth of 63% in the last one year.

“It has been observed that customers prefer mobile banking and internet banking over call centers/ IVR.”

E-Commerce (online shopping) in Pakistan also started picking up with 571 merchants offering their products online. During FY17, 1.2 million transactions valued at Rs9.4 billion were processed through e-commerce.



Point of sale

In order to encourage the use of point of sale (POS) machines, banks and third party providers are being encouraged to incentivise merchants, by offering them associated value added services.

In addition, more convenient payment methods like QR codes and mobile apps are also being introduced in the market by payment schemes and new fintechs; however, their uptake is still in infancy and limited to upscale outlets.

However, the total number of POS machines grew by 7.3% to 54,490 during the year whereas the value of total transactions processed through the machines grew by 23% to Rs246 billion, the central bank said.

The number of payment/plastic cards increased 8.8% to 36.6 million as on June 30, 2017. These cards include over 17.9 million debit cards, over 8 million ATM-only cards and around 1.3 million credit cards.

Published in The Express Tribune, November 5^th, 2017.

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