Digital transactions boom in Pakistan

Once made necessary by Covid-19, online transactions are now becoming a norm for the Pakistanis as the country witnessed a strong growth in such transactions during the second quarter of current fiscal year 2020-21.

The State Bank of Pakistan (SBP) released its report titled “Quarterly Payment System Review” for the second quarter (Oct-Dec) of fiscal year 2020-21, which showed a strong growth in digital financial transactions in the country.

“It is a moment of pride for us as a nation to see such a remarkable growth in this sector,” said SI Global CEO Noman Ahmed while talking to The Express Tribune.

According to the report, during the Oct-Dec 2020 quarter, 296.7 million e-banking transactions, valuing at Rs21.4 trillion, were carried out, registering a growth of 24% in volumes and 22% in value compared to the same quarter of last year.

Most of the rise in e-banking transactions was seen in internet and mobile banking.

“Owing to Covid-19, it is no surprise that the country has seen a boom in digital financial transactions,” he said, adding that for most of the people before 2020, e-banking was a difficult process to handle, which carried with it significant security risks as well.

“Coronavirus lockdown was a forceful phenomenon, but it is now turning into a normal thing,” remarked DH Corporation Research Lead Karim Punjani.

The volume of mobile banking transactions stood at 44 million, up 147%, valuing at Rs1.12 trillion, up 192% in the quarter under review compared to 17.8 million transactions valuing at Rs382.5 billion in the same quarter of last year.

The number of registered mobile phone banking users reached 9.4 million, an increase of 5%. Similarly, 22 million internet banking transactions valuing at Rs1.3 trillion were recorded during the Oct-Dec 2020 quarter compared to transactions worth Rs1.1 trillion in the previous quarter.

“The decision taken by the central bank to waive inter-bank fund transfer (IBFT) charges is a good move and we hope this continues,” said Nouman Younas, who recently conducted online transactions.

“Decisions such as waiving the IBFT fee will lead to a reduction in the workforce in commercial banks,” said another digital transaction user Adeel Nazir.

In response to SBP’s measures to incentivise the installation of Point-of-Sale (POS) machines to facilitate digital payments through debit or credit cards, the number of POS machines grew 18% during the quarter under review, reaching 62,480 throughout the country, the report said.

With the help of these POS machines, 23 million transactions amounting to Rs115 billion were processed during the second quarter of FY21, which shows the positive impact of conducive policies adopted by the central bank, particularly targeted at increasing the payment acceptance infrastructure in the country.

Authorities should encourage banks to establish CDM (cheque/cash deposit machine) like ATMs as they eliminate human interaction and increase online banking efficiency, said a Karachi-based user of digital transactions Mubashir Mahmood.

Card-based transactions on e-commerce portals also increased substantially, with e-commerce merchants processing 5.6 million transactions through payment cards amounting to Rs15 billion in the second quarter of FY21 compared to 3.9 million valuing at Rs11.9 billion in the first quarter.

This marks a shift in the behaviour of Pakistan’s population and also complements government’s efforts to develop a more market-friendly landscape for acceptance of payments by e-commerce merchants.

Published in The Express Tribune, March 19^th, 2021.

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