SBP governor stresses rapid digitisation of payments

Reza Baqir says heavy reliance on cash hinders financial, economic development

KARACHI: There is a need for rapid digitisation of payments in order to realise full benefits for the economy as cash is still the preferred mode of payments for routine and day-to-day activities emphasised State Bank of Pakistan (SBP) Governor Reza Baqir.

Addressing a workshop on “Digital Payment Reforms” on Saturday, Baqir highlighted the issues that had long been outstanding and needed the attention from all the stakeholders.

The event, organised by the central bank in collaboration with the World Bank, was aimed at sharing the draft National Payment Systems Strategy and seeking the input of key stakeholders involved in its implementation.

The governor noted that heavy reliance on cash and limited use of digital channels reduced economic efficiency, hindered financial and economic development and impeded the goal of documenting the economy.

To address these issues, he emphasised the importance of building a modern and robust payment system in the country that could enable the provision of cost-effective and easily available digital financial services to the general public. “This is a key strategic objective of the SBP.”

Elaborating, Baqir shared with the audience the central bank’s plans for leading aggressive adoption and implementation of the National Payment Systems Strategy in the country. He stressed that interoperability was the key to achieving faster digitisation goals.

The governor informed the participants that a new faster payment gateway would be launched next year to facilitate instant transfer of funds. He identified government payments and receipts, and merchant payments to be the key elements in accelerating the digitisation of payments in the country.

He also noted the need for reducing the high cost, especially the interchange fee, in the payments industry and emphasised that all stakeholders should work collaboratively for increasing digital access points in the country.

According to an SBP report titled Payment Systems Review for 3QFY19, banking through digital channels has been gaining increasing popularity in the country in recent years.

The Pakistan Real Time Interbank Settlement Mechanism (PRISM), currently being operated, is the only large-value payment system. It enables the transfer and settlement of high-value interbank funds and improves the overall efficiency of the large-value payment system. 

Published in The Express Tribune, October 6^th, 2019.

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