Remittance rewards

The government is moving forward with its plans to ‘gamify’ remittances by offering rewards for sending money to Pakistan. Starting from October, any money sent back to Pakistan through official channels — mainly banks— will be eligible for the National Remittance Loyalty Programme (NRLP). Reward points earned under the NRLP would be redeemable for cash or other benefits, such as paying for PIA tickets and upgrades, tax and duty payments relating to personal phones and cars, or paying for goods and services at several state-owned companies businesses.

The benefits will progressively increase as the amount remitted increases. Total remittances under $10,000 will earn reward points at the rate of 1%, amounts up to $30,000 will earn 1.25%, and amounts over $30,000 will earn 1.5%. The scheme, approved last month, will cost around Rs13 trillion this year, according to reports. This amount, however, could rise significantly if the programme is widely adopted, because the government has only estimated that about 25% of remitters will sign up in the current fiscal year.

The government is also crediting banks for bearing the cost of developing and operating apps to facilitate the process, although that investment is hardly altruistic — banks will be the biggest direct beneficiaries of increased funds being remitted through formal financial institutions. The rewards structure is in line with the benefits offered by banks and many other credit card providers, which should not be surprising considering that it is the brainchild of one of the country’s most prominent bankers — incumbent Finance Minister Shaukat Tareen.

The programme itself seems mostly harmless and could actually help raise remittances significantly. However, there is always the risk of the programme running a net loss. This would happen if it fails to encourage an increase in total remittances since the government is potentially ‘spending’ up to 1.5% of all remittances. Meanwhile, there is also the potential for people to abuse the programme for perks, although existing banking controls on money leaving the country may counteract the worst of these.

Published in The Express Tribune, September 1^st, 2021.

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