Digital Transactions in Pakistan Soared 30% to $500 Billion in Fiscal Year 2020-21

Digital transactions in Pakistan soared 31.1% to Rs. 88 trillion or $500 Billion in fiscal year 2020-21, according to the nation's top central banker. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, Governor of the State Bank of Pakistan, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value. The nation's central bank also reported that the large-value payments segment, known as Real-time Inter-Bank Settlement Mechanism (PRISM),  saw growth of 60% by volume and 12.8% by value to Rs. 444.6 trillion or $2.5 trillion in FY 2020-21. There are several factors driving rapid shift to digital technology, including expanding digital infrastructure, new technologies and the government's efforts to document Pakistan's huge undocumented economy. Grey-listing of Pakistan by the Financial Action Task Force (FATF) has also played a role. 

Internet & Mobile Banking in Pakistan. Source: SBP

Digital Transactions Growth: 

Growth in digital transactions was led by major uptake in mobile banking (29% increase in the number of users and 133.6% and 178.7% hike in volume and value, respectively) and internet banking (32% increase in the number of users and 65.1% and 91.7% up in volume and value, respectively), according to the State Bank of Pakistan. “If the figure is $500 billion now, you can imagine the pace at which we are digitizing,” said Dr. Baqir Raza, the head of Pakistan's central bank.“Therefore, there is a huge potential for enhancing financial inclusion,” he added. 

E-Banking in Pakistan. Source: Dawn

Pakistan's central bankers have taken the plunge into the world of digital payments with their own offering: Raast. It aims to create an instant low-cost payment system that can seamlessly and securely connect government entities, a variety of banks, including microfinance banks (MFBs),  electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs) like 1Link and NIFT which may choose to take advantage of it.  Currency and coins in circulation account for about 43% of Pakistan's total money supply. The introduction of Raast is part of the government's effort to modernize and document the nation's cash-based informal economy. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion. Digital financial services will also promote e-commerce in Pakistan. 

Raast Digital Payment System. Source: State Bank of Pakistan

Raast Digital Payments:

Raast is a system of digital payment infrastructure. It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost.  

Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs. 

It has been developed in-house by the State Bank of Pakistan  in collaboration with Karandaaz, Bill & Melinda Gates Foundation and supported by the World Bank, the British government and the United Nations.
Private Payment Apps:
Several private payment apps, including EasyPaisa and JazzCash, are already operating in Pakistan. These apps lack interoperability with each other. Each operates in its own silo. Neither of these offer links to financial institutions and government entities. 
There are also several EMIs (Electronic Money institutions) in Pakistan. These include NayaPay, SadaPay and Finja.  EMIs are not banks, but can store deposits. These are not tied to any banks or telcos. They could all use back-end plumbing offered by Raast. 
Payment Service Providers (PSPs) :
1Link and NIFT payment and switch networks, supported by different groups of Pakistani financial institutions, currently process the bulk of credit/debit card and ATM transactions as well as e-payments in Pakistan. State Bank's Raast promises to be cheaper and faster than these networks. Raast also offers processing of e-payments by government entities. 
Raast Future Roadmap:

State Bank of Pakistan  intends to demonstrate Raast's usefulness by first processing government payments to individuals, including government employees and Ehsaas welfare beneficiaries, before expanding it for business applications.  SBP’s plan is to start person-to-person (P2P) payments using just the phone numbers in Q3/2021 and then bring merchants on board with QR codes by Q1/2022. 

Digital transactions in Pakistan soared 31% to $500 billion in FY 2020-21. Among the factors driving rapid shift to digital technology are: expanding digital infrastructure, new technologies and the government's efforts to document Pakistan's huge undocumented economy. Grey-listing of Pakistan by the Financial Action Task Force (FATF) has also played a role.  State Bank of Pakistan's launch of Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

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Comment by Akhtar Hussain on February 21, 2022 at 11:21am

And they said it was a failed state ?


Comment by Riaz Haq on February 24, 2022 at 10:39am

NayaPay secures $13 million, largest seed funding in South Asia for its messaging and payment app – TechCrunch

Pakistan-based fintech platform, NayaPay, has raised $13 million in a seed round to rollout its multi-service messaging and payment app, and to build payment acceptance and financial management tools for businesses in the South Asian country.

NayaPay CEO and founder Danish Lakhani told TechCrunch that the super-app allows people residing in Pakistan to send and receive money, split bills and make payments conveniently from smartphones. They have also issued virtual and physical Visa cards linked to the NayaPay wallet further allowing its users to make POS payments, and businesses to accept payments.

Lakhani said that NayaPay is leading a digital payment revolution in Pakistan, a cash-heavy economy, where only 1% of $4 trillion payments are done electronically. This is in a country of 220 million people. But NayaPay’s goal is even bigger; to bank millions of adults that remain unbanked, with women affected the most — only one in three women holds a bank account. The youth and freelance communities in Pakistan are also majorly locked out by traditional banks. About 100 million people are unbanked in Pakistan, according to this World Bank report.


Pakistan’s NayaPay Pvt. has raised $13 million in early stage funding as it seeks to capture millions of users in one of the world’s largest under banked nations.

The Karachi-based startup’s seed round was led by Zayn Capital, MSA Novo and Silicon Valley early-stage investor Graph Ventures, Chief Executive Officer Danish Lakhani said in an interview. NayaPay became the first startup to offer financial services after receiving a license from the State Bank of Pakistan in August. The fintech’s chat-led payments app started by targeting students and freelancers.

Comment by Riaz Haq on March 6, 2022 at 8:46pm

Pakistan aims to spur economic growth to 6%
Finance Minister Shaukat Tarin confident of 6% sustainable GDP growth to reduce dependence on IMF; Aims at over $100 billion exports in next five years; ‘Super cycle’ is a serious threat to global economic recovery

“We don’t need the IMF if we achieve sustainable growth of six per cent. I don’t think we need another IMF programme once we complete the ongoing extended fund facility (EFF) in Setptember,” Tarin told Khaleej Times in an exclusive interview in Dubai.

The IMF, which forecasts four per cent GDP growth for Pakistan, said the EFF programme had strengthened Pakistan’s fiscal buffers before the start of the Covid-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020.
Pakistan, which secured more than 20 bailouts from the IMF in the past five decades, signed a $6 billion loan programme in July 2019. It completed the fund’s six reviews and drew $3 billion so far to support the country’s foreign exchange reserves, which currently stood firm at $23 billion.

“We are going to start a two-week process of seventh IMF review of Pakistan economy on Monday [March 7, 2022]. The successful review will help draw another $1 billion tranche as we have already achieved the targets in December,” Tarin said, and adding that the eighth and ninth reviews will bring the remaining $2 billion to the national kitty by September.

The IMF, which forecasts four per cent GDP growth for Pakistan, said the EFF programme had strengthened Pakistan’s fiscal buffers before the start of the Covid-19 pandemic, and a strong economic recovery has taken hold since the summer of 2020. It also warned that Pakistan’s economy remains vulnerable to flare-ups of Covid-19, tighter international financial conditions, a rise in geopolitical tensions and delayed implementations of structural reforms.

No more IMF help

“The sustainable growth of five to six per cent is the only way to reduce dependence on IMF and other multinational donars, and we are confident of achieving this target under the leadership of Prime Minister Imran Khan,” the finance minister said.

Elaborating, he said the government’s economic reforms had revived sick industries, improved the agriculture sector and boosted exports despite commodity price shock in international markets. However, the country still needs to increase saving rates and revenue collection to sustain the growth momentum in coming years.

“We are working very hard to increase saving rates and tax collections as well as bridge the gap between exports and imports. Revenue collections have already hit Rs6 trillion, and next year we will achieve Rs8 trillion taxes,” Tarin said.

Economic experts said the rate of savings, which is currently around 15 per cent, should be increased to 25 per cent in Pakistan. They also said the tax-to-GDP ratio should also be increased to 20 per cent from 10 per cent to sustain higher growth momentum.

“Pakistan’s information technology has an immense potential to grow, and the government is keen to revolutionise this sector to boost exports in coming years. We can double our traditional exports in next four to five years and lift IT exports by providing incentives to the sector and building a strong ecosystem for startups in the country,” the finance minister said.

“In the next five years, our traditional exports will touch $60 billion plus while IT exports could be at $50 billion, pushing the tally to over a $100 billion annually. In addition, $30 billion remittances per annum will help ensure a sustainable current account surpluses,” he added.

Comment by Riaz Haq on March 11, 2022 at 1:13pm

Bilal I Gilani
Pakistani banking system processed 227 trillion Rs of transactions in one quarter

That too when only 5% transaction are through banking channels

Pakistan's true potential is yet to be explored and exploited

Comment by Riaz Haq on March 23, 2022 at 4:41pm

#Careem Pay registered over 66 million transactions across six core markets in 2021. #Pakistan had the highest use of peer-to-peer #payments and #mobile recharge, with over 443,000 transactions. #P2P

The ride-hailing company widened its offerings from food delivery to money transfer
Careem is, in its own words, ‘driven by the purpose of simplifying people’s lives and building an awesome organization’

Careem saw at least a two-fold increase in its services across 13 markets in the Middle East, North Africa and Pakistan in 2021.
It completed a total of 109 million rides, the firm said in its 2021 customer and business trends report.
Cars and bikes transactions grew by 2.6 times compared to December 2020, while delivery and bill payments services grew 2.4 times and 2 times respectively.
In 2021, one in seven customers in Saudi Arabia used multiple services on the app, and the most popular combination of services was ride hailing and food delivery.
The airports with the most Careem journeys in 2021 were Jeddah with 57,000 trips, Karachi with 211,000 trips, and Dubai with 207,000 trips.
In Q1 2021, Careem revealed a new, disruptive food delivery business model that replaced traditional high-percentage aggregator commissions with a 0 percent commission, giving restaurants of all sizes fair and transparent pricing to grow profitably. It reduced delivery bills by nearly 50 percent and increased the number of orders by up to 20 percent in some restaurants.
The number of the new restaurant outlets that joined Careem in 2021 increased by 58 percent over 2020.
Careem Pay registered over 66 million transactions across six core markets in 2021. Pakistan had the highest use of peer-to-peer payments and mobile recharge, with over 443,000 transactions. Careem Captains topped-up their phones 32.6 million times in 2021, amounting to a total of $1.5 billion.

Comment by Riaz Haq on March 26, 2022 at 8:02am

Shaukat Tarin
Private credit off take reported at Rs. 911 billion from July to March 11, 2022, vs Rs. 357 billion for same period last year. The substantial increase is indicating robust economic activity. Meanwhile, GoP has retired Rs. 291 billion to SBP, creating room for private sector.


Private sector borrowings swell to Rs911bn

KARACHI: The private sector credit off-take jumped by 155 per cent to Rs911 billion during the July-mid March period compared to Rs357bn in the same period of last fiscal year, data shared by the State Bank of Pakistan (SBP) showed on Friday.

The increase in borrowings indicates higher economic activities that could lead to achieving the growth target set by the government.

The increase in terms of percentage is the biggest growth in the last five years while it has already crossed the total private sector credit off-take witnessed in FY21 when Rs766bn was borrowed. Initially, growth was announced at 3.9pc but later it was reviewed by National Accounts Committee which found the growth as 5.37pc in FY21. It was unexpected for most analysts and economists and the growth rate was termed as surprising.

The SBP in its last monetary policy predicted that the economic growth rate could be in the mid of 4-5pc for FY22 which is encouraging for the government facing challenges of Covid-19 pandemic, record oil and commodity prices and huge traded deficit.

The higher oil prices and costly imports increased inflation ultimately forcing the SBP to increase interest rate which is currently at 9.75pc. Despite costly borrowings, the private sector kept increasing its economic activities which are reflected from the credit off-take during FY22.

The conventional banks were at the forefront as they extended loans worth Rs567bn to the private sector during this period which was much higher than Rs174bn credit off-take during the same period in FY21.

The Islamic banks also increased their lending to the private sector but the size of the increase was much less than conventional banks. The lending to the private sector by Islamic banks reached Rs127bn during this period compared to Rs71bn in the same period in FY21.

The lending to the private sector by Islamic branches of the conventional banks was double than the previous fiscal year. These branches extended loans worth Rs217bn compared to Rs111bn in the same period in FY21.

The current private sector credit off-take has surpassed the total loans extended in the entire FY21. In the previous fiscal year, the private sector credit off-take was Rs766bn.

Some banking analysts believe that the private sector is getting higher loans due to low intake by the federal government from the banking system while deposits also increased this year.

This created higher liquidity for the banks, forcing them to lend maximum to the private sector.

Comment by Riaz Haq on March 28, 2022 at 12:55pm

Federal Minister for Industries and Production Makhdum Khusro Bakhtyar said LSM growth grew by 8.2 percent in February 2022, mean while, it posted growth of 7.6 percent during July-Jan FY22. He added that all major industries including automobile and fertilizer industry had showed remarkable growth in this duration, said a statement issued here on Saturday.

The Minister noted that growth of LSM is imperative to enhance manufacturing base and job creation in the country.

He said recently Prime Minister of Pakistan Imran Khan announced Industrial Promotion Package which would not only revitalize industrialization in the country but also enhance our manufacturing sector. According to PBS data reported on Friday, the industry output increased by 8.2 percent during the month of January 2022 compared to the growth of January 2021 on year on year basis.

The major sectors that showed positive growth during July-January (2021-22) included textile (2.9pc), food (3.4pc), beverages (2.5pc), tobacco (21.9pc), wearing apparel (18.3pc), leather products (4.5pc), wood products (172.2pc), paper and board (8.2pc), coke and petroleum products (0.5pc), chemicals (5.4), Chemical products (15.5pc), automobiles (63.5pc), iron and steel products (17.52pc), furniture (553.pc),automobiles (63.5pc) and other manufacturing (22.2pc).


LSM growth jumps 7.6 pc in 7 months

ISLAMABAD, Mar 18 (APP): Large Scale Manufacturing Industries (LSMI) production grew by 7.6 percent during the first seven months of the current fiscal year as compared to the corresponding period of last year, Pakistan Bureau of Statistics (PBS) reported Friday.

The LSMI Quantum Index Number (QIM) was recorded at 120 points during July-January (2021-22) against 111.5 points during July-January (2020-21), showing growth of 7.6 percent, according to latest PBS data.

The highest increase of 9.7 percent was witnessed in the indices monitored by the Provincial Board of Statistics (BOS), followed by 6.9 percent increase in indices monitored by Ministry of Industries and 0.5 percent increase in the products monitored by the Oil Companies Advisory Committee (OCAC).

On year-on-year basis (YoY), the industry rose by 8.2 percent during the month of January 2022 compared to the growth of January 2021, according to PBS latest data.

The major sectors that showed positive growth during July-January (2021-22) included textile (2.9%), food (3.4%), beverages (2.5%), tobacco (21.9%), wearing apparel (18.3%), leather products (4.5%), wood products (172.2%), paper and board (8.2%), coke and petroleum products (0.5%), chemicals (5.4), Chemical products (15.5%), automobiles (63.5%), iron and steel products (17.52%), furniture (553.%),automobiles (63.5%) and other manufacturing (22.2%).

The commodities that witnessed negative growth included pharmaceuticals (3.5%), rubber products (25.5%) and electrical equipment (1.2%).

It is pertinent to mention here that the provisional QIM is being computed on the basis of the latest production data received from sources, including OCAC, Ministry of Industries and Production (MoIP), and PBS.

Comment by Riaz Haq on April 14, 2022 at 11:10am

Egypt’s Paymob to Start Pakistan Operation to Tap Growing Market

Egypt’s digital payments provider Paymob plans to start its operations in Pakistan this month, taking advantage of a market that has seen a funding frenzy in its startups.

The Cairo-based company, which allows online businesses and offline merchants to accept and send payments, sees a significant opportunity in Pakistan, Islam Shawky, CEO and co-founder of Paymob, said in an interview. The company plans to have 100,000 merchants in its first two years in Pakistan, he said and added it currently operates in Egypt, Jordan and Kenya and aims to enter Saudi Arabia later this year.

Comment by Riaz Haq on April 15, 2022 at 10:33am

1/2 #SBP issues Q2FY22 report on Payment Systems that shows encouraging growth in digital banking. Overall e-banking transactions volume grew by 10.7% to 400mn whereas value by 22.8% to over Rs33tn. During CY2021 volume increased by 41% to 1.4bn and value by 45% to Rs106tn.


2/2 Mobile banking volume were up by 18.8% & value by 35.4%. Similarly, internet banking volume increased by 13.9% & value by 28%. See PR:

Comment by Riaz Haq on April 18, 2022 at 4:19pm

Egypt-based fintech Paymob has partnered with Pakistan-based Bank Alfalah for digital payments acceptance across Pakistan.

The fintech has signed an agreement with Bank Alfalah to activate and support merchant acquisition and integration services across the country. This collaboration will enable an instant onboarding feature in Pakistan using Paymob’s solutions such as payment gateway integration, POS terminals, and SoftPOS.

The instant onboarding feature is supported by the digital onboarding regulations recently published by the State Bank of Pakistan and comes as one of the steps the State Bank has led to enable MSME merchants in order to further digitise the ecosystem.

The partnership follows the launch of Paymob’s ‘Tap-on-Phone’ payment acceptance mechanism in Egypt. The Tap-on-Phone service will also be accessible for Pakistan-based merchants, enabling them to use mobile phones directly to service payments. The company aims to onboard over 100,000 merchants across Pakistan, until 2024, and improve ecommerce acceptance for online merchants.

The market opportunity in the country is increased given the range of retail outlets and SME businesses across the country’s cities. With over 4 million SMEs using just over 80,000 POS terminals and less than 3000 ecommerce payment gateways, the market is suited to meet Paymob’s criteria and strategy to expand globally, and bridge the digital financial gap, according to the press release.


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