KARACHI: Fintech is all set to revolutionise Pakistan’s financial sector in upcoming months as the telecom regulator is taking steps to facilitate online transactions across all mobile phone networks just like making a phone call from one network to another.
Fintech (financial technology) is an electronic platform that will enable users to make financial transactions from one platform to any account-holders on other mobile phone networks all over the country.
So far, such online transactions were not possible because of the absence of inter-operability across the telecom network.
At present, Telenor’s Easypaisa, Jazz’s Mobicash and United Bank Limited’s Omni are providing mobile-based branchless banking services. However, their customers cannot transfer money from one service to another.
In an effort to promote fintech, the Pakistan Telecommunication Authority (PTA) – the telecom regulator – has decided to award Third Party Service Providers’ licences by June or July 2018, which will pave way for inter-operability between cellular mobile operators and ramp up financial inclusion all over the country.
“We have received two applications and the Third Party Service Providers’ system is expected to be launched in mid-2018,” said the PTA spokesperson in an email response to The Express Tribune.
This innovative system will also provide access to banking services for people having simple feature phones who will be able to make online financial transactions.
The new platform will help dismantle existing barriers that prevent digital wallets (branchless bank account-holders) from sending money to different bank accounts. Users will be able to make transactions from wallet to wallet or wallet to the bank account.
This will significantly reduce hard cash transactions and stave off the threat of cash theft. The State Bank’s vision of financial inclusion will also get a boost as it aims to provide 50% of the adult population access to the legal financial system by 2020.
Adnan Khan, a retailer in Sultanabad, a low-income locality of Karachi, told The Express Tribune that he expected his business to jump 100% after the launch of fintech platform. At present, he sends back many of his clients just because all mobile banking services are not available at his outlet.
PTA insists that it is an open licensing regime and it can issue more licences as per market needs and absorption.
Licence fee for the Third Party Service Provider is Rs1 million and Rs10-million performance bond is mandatory which is associated with roll-out obligations. Other regulatory obligations like annual licence fee, which is 0.5% of gross revenue of the licensee, are applicable as per licensing conditions.
The number of mobile phone banking transactions, which stood at 1.2 million in the first quarter of 2017, increased 12% to 1.3 million in the second quarter. In terms of value, the transactions surged 24% from Rs21 billion in the first quarter to Rs26 billion in the second quarter.
With the Third Party Service Providers’ platform, more digital financial services will be available in the Pakistani market.
“The third-party framework will also be critical for the launch of Asaan Mobile Account under the National Financial Inclusion Strategy,” said the PTA spokesperson.
Published in The Express Tribune, January 7th, 2018.