SBP focusing on P2C under Raast

Baqir says it will create enabling environment for e-commerce in Pakistan

KARACHI:

Pakistan’s central bank is working to roll out product-to-consumer (P2C) digital payment system under Raast this year which will create an enabling environment for e-commerce business to thrive in the country.

The instant payment system would lead the way for the central bank to introduce its own digital currency in future.

“The next phase that we hope to complete this year is the request to pay feature at P2C stage of our faster payment system (Raast) which we hope will boost e-commerce in Pakistan,” State Bank of Pakistan Governor Reza Baqir said in a webinar on Thursday.

Two weeks ago, Prime Minister Imran Khan launched P2P – person-to-person – digital payment system under Raast. “It is fast, free and secure and it places Raast at par with some of the most advance payment systems in the world. The roll-out of P2P is underway right now.”

Read: Foreign exchange: SBP reserves fall $344m to $16.46b

Another key area to develop the digital ecosystem is open banking in Pakistan. State Bank of Pakistan has been engaged in a conversation with stakeholders including banks as well as non-banking institutions to share bank accountholder data with other banks and fintechs with accountholders permission so that the third party could offer a better financial product to them.

“The conversation is the clearest example of our goal to put the customers first,” he said. “Under the proposed framework, if the customers agreed, the banks would be able to share their data with other banks or fintechs so they are able to offer better customer centric products.”

The central bank is studying and engaged in a conversation with other central banks at world to introduce its own digital currency. “Our faster payment system (Raast) puts us in a position where we believe that we can seriously consider the pros and cons of central bank digital currency and appropriate design features for Pakistan.”

“During the last fiscal year (FY21), we had 1.2 billion transactions worth over $500 billion that were processed through retail e-banking channels. This figure is more than the GDP of Pakistan,” he said. “Moreover, these transactions represented a growth of over 30% from the previous fiscal year in terms of volume as well as value. This suggests the promising future for digital banking in Pakistan.”

The county has between 50-100 million citizens who have mobile phones but do not have bank accounts. The country has 11 million mobile app users for digital financial services and about 7 million internet banking users for digital financial services. “This means that there are at least 70 million people who have bank accounts but not currently using digital means such as app or internet for their banking needs.”

Pakistan is a country that is driven for a major digital evaluation in its financial system. “Our licensing and regulatory framework for digital bank is part of an overall region for a financial ecosystem in our country.”

Given the rapid pace at which the innovation is taking place in the global financial system, SBP sees its role not only as a regulator of the country’s financial system but also as an enabler to promote its goals of inclusion and innovation such that “we bring banking in an easy and affordable manner to all Pakistanis.”

Pakistan is the world’s fifth largest country and it has one of the youngest population. Around 65% of Pakistan’s population is between 15-40 years old. This gives the country a prime opportunity to offer digital products and services.

Digital identity builder the foundations of a digital society. In Pakistan, we have 120 million adults that have a biometrically verified national ID.

“We have 43 licensed banks, (including) 32 commercial banks as well as 11 microfinance banks and together they have more than 17,000 branches in the entire country. We have an estimated 82 million unique bank accounts including mobile bank accounts.”

Pakistan has 189 million mobile telecom subscribes and out of these there are 108 million subscribers that are 3G or 4G subscribers which means a penetration rate of around 50% and given that some people may have two mobile phones or two SIMs.

Published in The Express Tribune, March 4^th, 2022.

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