After receiving a boost in the wake of Covid-19 lockdowns, the uptrend in digital payments continued as Pakistan recorded a robust increase in the number of electronic transactions in the first quarter of fiscal year 2021-22.
According to the State Bank of Pakistan’s (SBP) Payment Systems Review released on Monday, e-banking continued to thrive in both volume and value terms as it grew 12% and 16% respectively in the quarter under review over the same quarter of fiscal year 2020-21. The report covered July-September period of 2021.
E-banking is defined as transactions conducted via electronic channels including real-time online branches, ATMs, mobile banking, internet banking, call centre banking, Points of Sale (POS) and e-commerce.
Two major areas that depicted high adoption of digital payments were mobile and internet banking.
The number of mobile banking users grew 4% quarter-on-quarter to 11.3 million in the period under review. The number of transactions conducted via mobile banking channels stood at 79.1 million with a value of around Rs2.2 trillion, showing a quarter-on-quarter growth of 29% in volume and 36% in value.
“Internet banking also contributed to the upswing in the use of e-banking services by registering 31% quarter-on-quarter growth in users, who conducted 30 million transactions amounting to Rs1.9 trillion,” the report said.
“This amounts to 6% rise in terms of volume and 10% increase in value on a quarter-on-quarter basis.”
It added that electronic payments provided businesses the opportunity to grow faster as the end-goal of digitalisation of the banking system was to revolutionise the infrastructure and eliminate the need for cumbersome bank visits and long waiting lines.
Digital payments are now swiftly becoming mainstream in Pakistan as they are seamless, fast and simple, the central bank added.
It highlighted that the retail sector continued to show strong adoption of digital payments.
Overall e-commerce transactions recorded an impressive growth of 87% in volume and 21% in value, though the number of e-commerce merchants remained nearly the same as in the last quarter.
During the quarter under review, 12.7 million e-commerce related transactions, amounting to Rs22.3 billion, were conducted using the digital payment channels.
Similarly, the number of merchant POS machines increased 10%, reaching 79,134 machines in the country.
These machines processed 28.1 million card-based transactions at merchant locations with a value of almost Rs134.9 billion, an increase of 16.1% in volume and 10.6% in value.
As of end-September 2021, there were 46.2 million cards in circulation, which mainly comprised debit cards (64%), social welfare cards (22%), ATM-only cards (10%), credit cards (4%), and prepaid cards (0.3%).
“I am glad to see the growth in digital payments,” SI Global CEO Noman Ahmed Said told The Express Tribune. “Digital payments gained popularity in Pakistan following the pandemic outbreak, which has produced robust growth numbers.”
Digital payments not only help in maintaining higher cash flow but also allow immediate access to an account holder’s money and process payments instantly, added Said.
“Moreover, they also ensure transparency in financial records and paper trail, thus making illegal monetary activities detectable,” he said.
“While digitalisation has enhanced the ease and convenience for customers, it is important to be aware of our vulnerabilities in relation to the rising cybercrime rate in line with the boost in digital payments.”
Strong and up-to-date cybersecurity infrastructure must be put in place so that Pakistan is able to deal with cybercrime and protect the assets of public, he said.
“It is up to the government, IT personnel and experts to develop a plan that could be implemented,” Said stressed. “Though there is no doubt that digitalisation provides us ample freedom, we must remain cautious about the potential threat of cybercrime.”
Published in The Express Tribune, March 1st, 2022.
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