SBP offers P2M under RAAST

Pakistan’s central bank has formally launched the person-to-merchant (P2M) online payment option on its indigenous and instant payment system; Raast, a leapfrog step towards reducing the use of cash and digitalising and documenting the domestic economy.

P2M enables people to pay directly to merchants for shopping, dining and pay monthly utility bills through the quick response (QR) code. In a notification to all the regulated entities (REs) including scheduled banks, microfinance banks (MFBs), electronic money institutions (EMIs), payment system operators (PSOs) and payment service providers (PSPs), the State Bank of Pakistan (SBP) said, “The P2M service will enable payment acceptance by businesses using quick response (QR) codes, Raast Alias, IBAN and request to pay (RTP).”

"All REs shall enable…capabilities for processing P2M transactions via their delivery channels including mobile apps, internet banking portals and USSD channels (where applicable) by March 01, 2024." The central bank asked Raast merchant service providers (MSPs) to ensure that customers are not charged any fee on their purchases, by merchants or third parties.

"MSPs may…charge a reasonable fee from merchants for the services provided; however, they are encouraged to initially waive off such charges to promote merchant adoption."

SBP has instructed the existing merchants acquiring REs to complete the integrations with ‘RAAST’ for enabling their respective merchants and ecommerce players to accept payments through Raast P2M service by March 31, 2024.

Further, all REs shall ensure that billers/bill-aggregators already on-boarded by them are also enabled to accept payments via Raast payment options by March 31, 2024. SBP Director at Payment Systems Policy and Oversight Department Qazi Shoaib Ahmad said the other day “P2M has also been deployed on September 3, 2023.”

Raast is an initiative of the SBP that enables instant end-to-end digital payments among individuals, businesses and government entities. “P2M will be a game changer in terms of adoption of Raast at the industry level,” he said.

The Express Tribune learned that people were already making payments through the QR code worth Rs500 million a month, indicating that a hassle-free and seamless payment system was already in place. The addition of P2M may increase the quantum of financial transactions through online banking. There were around 3 to 4 million merchants in the country, who would be the potential beneficiaries of the instant payment system.

Read: Minister reviews Raast implementation

Earlier, the central bank launched two options on Raast namely person-to-person (P2P) and bulk payment transfers. The initial adoption of Raast has been wonderful. So far, more than 32 million account holders had been registered with Raast and 225 million transactions had been done through the platform amounting to more than Rs4.6 trillion.

In its Payment System Review for the quarter ended March 31, 2023, the central bank reported that the circulation of physical currency rose by almost 5%, reaching Rs8.06 trillion in the Jan-Mar quarter compared to Rs7.69 trillion in the previous quarter.

The increasing use of cash was causing high inflation and supporting growth of the undocumented economy. The parallel economy was not letting the documented economy stabilise and achieve sustainability.

Sandbox

In another development, the SBP said that in line with international best practices to promote innovation in the area of digital financial services (DFS), it is introducing the guidelines for regulatory sandbox, and technical sandbox for RAAST.

The objectives of the guidelines for regulatory sandbox are including promoting digitalisation and financial inclusion through the implementation of disruptive technologies, innovative and customer-centric products and services, and new business models.

Whereas, the technical sandbox for RAAST is aimed to ensure that innovations seamlessly integrate into the broader financial market infrastructure. This will specifically allow access for sandbox participants to test RAAST related products and services such as payment initiation services (PIS), account information services (AIS) and person to merchant (P2M) payments for new entities in a controlled and monitored environment to foster innovation.

Published in The Express Tribune, December 7^th, 2023.

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