Fintech to Expand Financial Inclusion in Pakistan

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan had a debit card, and only 1% of adults used them to make payments. Just 1.4% of adults used an account to receive wages and 1.8% of adults used it to receive government transfers in 2014. Since then, Pakistan has been leading the way in South Asia in digital finance and branchless banking.

According to the latest State Bank statistics on branchless banking (BB) sector, mobile wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% in July-September 2017 over previous quarter. A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan.

Karandaaz Pakistan , a non-profit organization, set up jointly by UK’s Department for International Development and Bill and Melinda Gates Foundation, is promoting financial technology in the country. Finja and Inov8 are among the better known fintech startups in the country. Chinese e-commerce giant Alibaba's Ant Financial's recent entry in Pakistan is creating a lot of excitement in Pakistan's fintech community.

Financial and Digital Inclusion in Pakistan. Source: Brookings Inst...

Importance of Financial Inclusion:

Access to regulated financial services for all is essential in today's economy. It allows people and businesses to come out of the shadows and  fully participate in the formal economy by saving, borrowing and investing.

Those who lack access to regulated banking services are often forced to resort to work with unscrupulous lenders who trap them in debt at unaffordable rates. Such loans in extreme cases lead to debt bondage in developing countries.

Financial inclusion is good for individuals and small and medium size businesses as well as the national economy. It spurs economic growth and helps document more of the economy to increase transparency.

Status of Financial Inclusion in Pakistan:

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan had a debit card, and only 1% of adults used them to make payments. Just 1.4% of adults used an account to receive wages and 1.8% of adults used it to receive government transfers in 2014. Since then, Pakistan has been leading the way in South Asia in digital finance and branchless banking.

M-wallets Growth in Pakistan in millions. Source: Business Recorder

Mobile wallets, also called m-wallets, are smartphone applications linked to bank accounts that allow users to make payments for transactions such as retail purchases. According to recent State Bank statistics on branchless banking (BB) sector, mobile wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% seen in Jul-Sep 2017 over previous quarter. Share of active m-wallets has also seen significant growth from a low of 35% in June 2015 to 45% in September 2017.

“The benefits of digital payments go well beyond the convenience many people in developed economies associate with the technology,” says Dr. Leora Klapper, Lead Economist at the World Bank Development Research Group. “Digital financial services lower the cost and increase the security of sending, paying and receiving money. The resulting increase in financial inclusion is also vital to women’s empowerment.”

A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan. Pakistan is ranked 16th among 26 nations ranked by Brookings Institution with an overall score of 69% in "The State of Financial and Digital Inclusion Project Report" for 2017. The Internet revolution is enabling rapid growth of financial technology (fintech) for increasing financial inclusion in Pakistan.

A McKinsey Global Institute report titled "Digital Finance For All: Powering Inclusive Growth In Emerging Economies" projects that adoption of financial technology (fintech) in Pakistan will add  93 million bank accounts and $36 billion a year to the country's GDP by 2025.   It will also create 4 million new jobs and add $7 billion to the government coffers in this period.

McKinsey report says that "Pakistan has solid digital infrastructure and financial regulation in place and has even had some success in digital domestic-remittance payments".

Fintech Players in Pakistan:

There are a number of companies, including some startups, offering fintech applications for smartphones that are linked to bank accounts. EasyPaisa operated by Telenor Microfinance is already well established. Among some of the better known startups working to disrupt the financial services sector in Pakistan are Finja and Inov8.

China's e-commerce giant Alibaba runs a major global e-payments platform Alipay. It also owns Ant Financial which has recently announced the purchase of 45% stake in Pakistan-based Telenor Microfinance Bank.

Telenor Pakistan runs its own e-payments platform EasyPay which will likely link up with Alipay global payments platform after the close of the Ant Financial deal.   Bloomberg is also reporting that Alibaba is in serious talks to buy Daraz.pk, an online retailer in Pakistan. These developments are creating a lot of excitement in Pakistan's fintech and e-commerce communities.

Alibaba and Alipay and other similar platforms are expected to stimulate both domestic and international trade by empowering small and medium size Pakistani entrepreneurial businesses and large established enterprises.

Karandaaz Fintech Promotion:

A key player promoting financial inclusion is Karandaaz Pakistan , a non-profit organization, set up jointly by UK’s Department for International Development and Bill and Melinda Gates Foundation.  It is providing grants for a number of local initiatives to develop and promote financial technology solutions in Pakistan.

Karandaaz Pakistan is promoting Fintech startups in  5 areas of focus:

1) Access to Financial services

Credit Scoring Models, Formalize savings through need based products, Digital lending services, and Insurance

2) Payments

Retail payments solutions through QR code,  Supply / Value Chain Digitization,  Ideas around digitization of online payments and merchant payments

3) E-Commerce

Smoothening of on-boarding process, Enabling Escrow Accounts for a retail merchant, Alternate payment modes other than COD

4) Interoperability

Innovative ideas to address the lack of interoperability among m-wallets

5) Early stage ideas related to:

 M-Wallet Use cases, Education of Financial Services through technology, Customer Engagement / Experience, Micro Credit, Digital Savings

Summary:

About 100 million Pakistani adults lacked access to formal and regulated financial services as of 2016, according to a World Bank report on financial inclusion.  Only 2.9% of adults in Pakistan have a debit card, and only 1% of adults use them to make payments. Just 1.4% of adults use an account to receive wages and 1.8% of adults use it to receive government transfers in 2014. At the same time, Pakistan is leading the way in South Asia in digital finance and branchless banking.

According to the latest State Bank statistics on branchless banking (BB) sector, m-wallets reached a high of 33 million as of September 2017, up 21% over the prior quarter. About 22 percent of these accounts – 7.4 million – are owned by women, up 29% seen in Jul-Sep 2017 over previous quarter. A McKinsey and Co analysis shows that adoption of financial technology (fintech) can help dramatically increase financial inclusion in Pakistan.

Karandaaz Pakistan , a non-profit organization, set up by UK’s Department for International Development and Bill and Melinda Gates Foundation, is promoting financial technology in the country.  Chinese e-commerce giant Alibaba's Ant Financial's recent entry in Pakistan is creating a lot of excitement in the country's fintech community.

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Comment by Riaz Haq on July 28, 2020 at 9:42pm

NayaPay partners with #Visa to fast-track #digital #payments in #Pakistan. NayaPay will use Visa Direct to simplify cross-border money transfers for freelancers & other Pakistan based businesses working with international clients, and overseas #remittances https://www.dawn.com/news/1571618

NayaPay has joined the Visa Fintech Fast Track program, speeding up the payment company’s integration process with Visa and enabling NayaPay to leverage the reach, capabilities, and security of the Visa global payments network.

Through the Fast Track program, NayaPay has access to Visa’s growing partner network, technology and resources to accelerate innovation in digital payments in Pakistan.

As an Electronic Money Institution (EMI), NayaPay will enable users to open E-Money accounts within a few minutes and make hassle-free digital payments to each other and to businesses.

NayaPay consumers and merchants can use their NayaPay Visa debit card to perform online and in-store transactions with millions of retailers worldwide as well as withdraw cash conveniently at any ATM location.

NayaPay customers can also scan Visa merchant QR codes to make payments directly through their app.

NayaPay will also be leveraging Visa Direct to simplify cross-border money transfers for freelancers and other Pakistan based businesses working with international clients, and households receiving remittances from their families abroad.

Users will be able to accept funds instantly and directly into their NayaPay wallets from over a billion Visa cards across the globe.

“We are committed to helping fintechs achieve their potential – enabling big ideas to flourish and supporting them through the reach, scale and security of the Visa network,” said Kamil Khan, Country Manager, Pakistan, Visa. “We have strategically evolved both our platforms and how we work with partners and customers to encourage a broadening of the fintech ecosystem globally and are excited by the opportunities and new use cases the NayaPay partnership will enable in Pakistan. Our work with NayaPay is a stepping stone in that evolution and we look forward to further supporting them on their journey.”

Danish Lakhani, CEO NayaPay, said: “We are delighted to have found a partner in Visa that shares our goals of making financial services simpler, more convenient and accessible to Pakistani users – the needs of whom have been overlooked for far too long. Over the past few months, we have been integrating Visa’s offerings to reinforce our issuing and acquiring capabilities and to deliver on our promise of becoming a part of citizens’ daily lives.”

“By joining Visa’s Fintech Fast Track program, exciting fintechs like NayaPay gain unprecedented access to Visa experts, technology, and resources,” said Otto Williams, Vice President, Strategic Partnerships, Fintech and Ventures, CEMEA at Visa. “The Visa Fintech Fast Track program lets us provide new resources that rapidly growing companies need to scale with efficiency. We’re delighted to welcome NayaPay into our program and look forward to working with them on their payment solutions that will transform financial inclusion in Pakistan.”

Comment by Riaz Haq on January 9, 2021 at 6:19pm

Digital payment and banking technology provider i2c has been tapped to fuel Pakistan’s first “digital-native financial super app” TAG, which is set to roll out in the first quarter of 2021, according to a Tuesday (Jan. 5) announcement emailed to PYMNTS.

https://www.pymnts.com/news/international/2021/i2c-chosen-fuel-paki...

"i2c’s tech stack provides us a sound foundation for enabling the kind of innovative, safe and secure payments experiences we’re bringing to market,” TAG CEO Talal Ahmad Gondal said in the announcement.

TAG provides instant payments capability to Pakistan’s unbanked adult population of roughly 100 million. The app includes features like mobile top-up, bill payment, automated teller machine (ATM) access, and the capacity to send and receive funds immediately without charges to anyone with a TAG account and tools to keep track of spending. The firm’s roadmap includes expansion to the Middle East and North Africa.

"We're thankful for TAG’s selection of our platform and for the opportunity to play a role in helping bring digital financial services to so many people," Aurangzaib Khan, i2c’s general manager for the MEA region, said in the announcement.

The news comes as Pakistan experienced a sizable rise in remittances from nationals working in other countries in July, showing a rare case of the pandemic helping a country’s economy.

"More good news for Pak economy,” Pakistan Prime Minister Imran Kahn tweeted in August. “Remittances from overseas Pakistanis reached $2,768 mn in July 2020, highest-ever amount in one month in the history of Pakistan. This is 12.2 percent increase over June 2020 and 36.5 percent increase over July 2019.”

As the worldwide pandemic and ensuing economic disruption have blurred the boundaries between traditional means of payment, i2c CEO Amir Wain told PYMNTS in November the largest business opportunity ahead will be in credit, with mobile becoming the largest game-changer.

“The stars of financial services in 2021 will have something to do with credit,” Wain said, adding the days of the simple checking or demand draft accounts (DDA) are over. “You can’t be a star with the DDA in 2021.”

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i2c Inc. drives innovation to the global digital payments and open banking industry with a multi-function platform built for endless possibilities. Advanced “building block” processing technology at its core provides a vast suite of credit, debit and prepaid solutions—all from a single global SaaS platform. This enables clients to dynamically configure payment solutions with unparalleled flexibility, agility and performance while maintaining highly secure and reliable payments.

Founded in 2001, and headquartered in Silicon Valley, i2c’s next-generation technology helps organizations drive revenue growth, scale and adapt to change while supporting millions of users in more than 200 countries and territories and all time zones

https://www.linkedin.com/company/i2c-inc/

Comment by Riaz Haq on January 9, 2021 at 6:19pm

As founder and CEO of i2c, Amir is responsible for defining a clear vision and setting strategic direction for the company. Recognized as a pioneer in the prepaid/stored value industry, Amir founded software development firm Innovative Private Limited in 1987 and led the global launch of the transaction processing platform FastCash. Propelledby the success of Innovative, he founded i2c, Inc. in 2001 to bring next-generation processing solutions to the payments industry. Contributing to the company’s expansive growth curve, under Amir’s guidance, i2c has introduced a number of industry firsts, including card-linked offers, event-driven account holder communications and gift card voice personalization.
Today, as market opportunities for payments & emerging commerce continue to expand at a dramatic rate, Amir is leading i2c’s continued push to innovate the enabling infrastructure and solutions that transform commerce. Today’s consumers want choices, and Amir’s vision is to build the flexible solutions they seek in an increasingly mobile and global world.

----------------

I was born in Pakistan and before I could legally purchase beer, I came to the US to the University of Texas in Arlington to do my computer science and engineering. So it was an interesting journey coming across the globe to a new place, not knowing anyone. And, I thought besides the education in the class, just being in a new place at that age was a great learning for me. So really, really enjoyed my time and I learned a lot, and I really would call myself a serial entrepreneur because I never really worked for anyone right after college. And in fact, even during my last 18 months at college, a friend of mine and I were doing custom coding and doing projects for people. And as I graduated, I went back to Pakistan to be with my parents and saw a tremendous opportunity in terms of exposing the power of personal computing to the corporate world. And I'm talking 1986 so the IBM XT had come out, Lotus 123 was there, and it was a 10X change on the old way of doing things and just showing people some use cases and how all of this could be used was number one, extremely exciting and offered tremendous benefits to the other party. And, so that kind of got me thinking about starting a business and we started with a training program of computer appreciation for the senior executives. And I started doing this multi-day course for the senior management at large organizations and from one referral to another, that got the business going.

So, everyone kind of loved the spreadsheet aspect but then they would have problems that couldn't be solved by a spreadsheet, like inventory management, anything which has historical data and so on. So, we started getting business for custom software development and from there, it was more and more focused on the finance sector and we did a lot of work for banks in that space doing custom software development. And, currently I am based in the Bay area. I've been here since 2001, beginning of 2001, so just after the dotcom party ended. So, it was a good time and it's been a fantastic journey since then. And i2c was my third business that I started. So, between 1986 and 2001, and the other two businesses still operate successfully, with one of them traded on the stock exchange. The other is run by management. I’m on the board and spending most of my time at i2c that I'm very actively engaged with, and since then I've invested in a couple of other businesses and help them get started. So absolutely entrepreneurship I think is one thing that I have kind of seen and had in me throughout this journey.

https://leadersinpayments.com/show-notes/f/amir-wain-ceo-of-i2c

Comment by Riaz Haq on January 9, 2021 at 6:44pm

To support issuers, i2c offers a highly configurable, global platform that provides the agile technology infrastructure and capabilities needed to respond to changing market conditions and stay competitive. Instead of pre-packaged products, i2c provides over 100,000 interlocking payment functions that we refer to as building blocks. These payment building blocks can be rapidly configured by issuers to create their own unique value propositions for credit, debit, prepaid or mobile banking products. Rapid product configuration enables issuers to get to market in days versus months.

Using the i2c platform, issuers can also enable cardholders to set up and manage their preferences for alerts, spending controls or restrictions in different types of merchants or by geography. For cardholders who travel cross border, they also have the opportunity to carry multiple currencies on just one card and lock in foreign exchange rates before they travel or transact, so they have better control of their spending.

The i2c Campaign Manager tool facilitates the management of real-time, personalized and interactive customer communications including SMS, email, Web or Mobile for marketing, customer support, account management and more. Campaigns can be automatically triggered based on a cardholder’s individual profile or behaviour and then a predetermined set of actions like delivery of a digital coupon can be executed that are customized to that specific cardholder – all in real time.

Moreover, i2c can support any form factor such as contactless payments, which are becoming particularly important during these times of the global pandemic. i2c essentially offers a full suite of services that support all stages of programme execution including processing, programme management, marketing, loyalty, rewards, contact centre servicing, as well as white label cardholder websites & mobile applications, reporting and analytics, settlement and reconciliation as well as fraud management, eliminating the need to integrate across multiple vendors.

Additionally, these benefits can be managed directly by program managers via the self-service online, administrative portal that is easily accessible from any location. Program managers can create, modify and launch programmes with the flexibility they need and on their schedule. This is another key factor in enabling issuers to get to market quickly.

Considering your involvement in global payments processing – can you name some key common threads in terms of openness to payments technology innovation and the types of problems that are trying to be solved in some of the different geographies you’ve pierced through?

Payments innovation extends to new Cloud/SaaS delivery models. We’ve noticed that cloud driven payment capabilities have gained a lot of traction and are still on the rise in terms of adoption. Companies looking to enhance their offering, whether they are looking for speed, omnichannel features or scalability, can find a more flexible and agile solution in the cloud. While keeping in mind that security must be kept in check at all times, she added that using platforms with proven reliability, 100% availability and stability are critical to long-term success.

Cloud processing is not exclusive to credit card processing. Using the flexible building block cloud-based architecture of i2c, clients can rapidly configure unique solutions over a wide range of payments and open banking solutions including: credit, debit and prepaid cards, mobile and online banking, lines of credit, instalment loans and more. For issuers looking to expand globally, a cloud based solution can easily facilitate that.

Handling international payments can be a high-risk environment. How can issuers better manage that risk?


https://thepaypers.com/interviews/how-issuers-can-win-the-fintechs-...

Comment by Riaz Haq on January 11, 2021 at 11:52am

#Pakistan govt launches new instant #digital #payment #gateway. Privately operated Jazzcash and Easypaisa are already available in Pakistan, but the State Bank's Raast would be the first to link government entities and financial institutions. #fintech https://reut.rs/39qqLau

Pakistan has announced a new government-run instant digital payment system in a bid to boost financial inclusion and government revenue in the country where only a fraction of economic transactions occur on the books.

The new system, called “Raast” or “direct way”, will be rolled out in three phases culminating in early 2022, officials from the State Bank of Pakistan said on Monday.

Developed through a multi-year collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation, with support from the World Bank, Britain and the United Nations, one goal for Raast is to boost involvement of women in the formal economy.

Several private-sector digital cash transfer systems that do not require a bank account, such as Jazzcash operated by telecommunications company Jazz and Easypaisa operated by telecommunications company Telenor Pakistan, are already available in Pakistan, but Raast would be the first to link government entities and financial institutions.

“I hope that in years to come we will look back and see this new digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty,” Bill Gates said in a statement read out at the announcement on Monday.

Merchants, businesses, individuals, fintechs, and government entities will be able to send and receive near real-time payments through the internet, mobile phones and agents. Government payments, including salaries and pensions, will also be made through Raast, as well as payments for nationwide financial support programmes, such as the Benazir Income Support Programme, and the Ehsaas Emergency Cash programme.


Pakistan’s ability to curb illegal financial transactions, including the financing of militant and extremist groups, has been under close scrutiny from international financial watchdog the Financial Action Task Force (FATF).

Prime Minister Imran Khan, whose government has taken steps to automate collection of taxes on transactions and tightened rules on banking, said shifting away from a cash-based economy and tackling corruption were the chief motivations behind Raast.

“Pakistan collects about the least amount of tax in the world,” Khan said. “We cannot build infrastructure, we cannot work on human development, or educate children, or improve hospitals.”

Comment by Riaz Haq on January 11, 2021 at 10:23pm

Pakistan has unveiled a new instant digital payments system, called Raast, that is aimed at boosting digitalisation within the country's economy.


https://www.zdnet.com/article/pakistan-launches-new-state-run-digit...


The new digital payments system is being touted by the Pakistani government as an easy-to-use, efficient, and cost-effective payment option that will provide opportunities to small businesses and those without easy access to payments systems.

Developed by the country's state bank, in collaboration with the Bill and Melinda Gates Foundation, the Raast project was created after a review revealed that individuals living Pakistan who are financially excluded and less privileged, like women, did not have access to fast payments systems, Governor Falah Baqir said.

According to the state bank, men in Pakistan are roughly five times more likely than women to have a bank account and, of the poorest 40% of the population, just 14% have an account.

"I hope that in years to come we will look back and see this new digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty," Bill Gates said in a statement.

Raast will be rolled out in three phases. The first phase, which commenced at the start of the week, includes a bulk payment module that will allow for the digitisation of dividend payments, salaries, pensions, and other payments from government departments.

In the next phases, Raast will digitise payments of micro and small business owners or merchants, which will allow them to pay suppliers on time and fulfil other urgent payment obligations, the state bank said.

The new payments system will eventually provide person-to-person payments, including features such as sending requests for payments and initiating payments using identifiers such as phone numbers or any other alias.

Comment by Riaz Haq on January 11, 2021 at 10:36pm

The new system is called "Raast," or "direct way," and will be rolled out in three phases culminating in early 2022, according to the news outlet. The system was developed over a period of years by a collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation.

https://www.pymnts.com/news/international/2021/pakistan-launches-pa....


With the new feature, merchants, businesses, individuals, FinTechs and government entities will be able to utilize real-time payments via the internet, mobile phones and agents, alongside government payments like salaries and pensions, Reuters writes. Payments for nationwide financial support programs, like the Benazir Income Support Programme and the Ehsaas Emergency Cash programme, can also be made through Raast, Reuters reports.

The Raast system was also supported by the World Bank, Britain and the United Nations. One goal for the company, according to Reuters, is to boost the role of women in the formal economy.

Also, while there are several private-sector digital cash transfer systems like JazzCash, which is operated by telecommunications company Jazz, or Telenor Pakistan's Easypaisa, Raast would be the first one to link government entities and financial institutions together.

“I hope that in years to come we will look back and see this new digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty,” Bill Gates said in a statement read out at the announcement on Monday, according to Reuters.

This isn't the only digital upgrade Pakistan will be receiving soon, as i2c has been tapped to work on the country's first digital-native super app, PYMNTS writes. The app, called TAG, will work to provide assistance for the 100 million Pakistan adults who are unbanked.

Comment by Riaz Haq on January 12, 2021 at 7:16am

#Pakistan PM #ImranKhan rolls out ‘Raast’ #digital #payments initiative to move to cashless #economy. The initiative is part of PM's “Digital Pakistan Vision” aimed at including the poor segments of society in the formal economy. #DigitalPakistan https://tribune.com.pk/story/2279540/pm-rolls-out-raast-initiative-...

The country took another step towards the digital world on Monday with the launching of Raast – Pakistan’s first instant payment system that enabled end-to-end digital payments among individuals, businesses and government entities within seconds.

Prime Minister Imran Khan launched the Raast at a ceremony here. The initiative is part of the prime minister’s “Digital Pakistan Vision” aimed at including the poor segments of society in the formal economy.

“Raast is a big step towards realising Pakistan’s potential; it will help the country move from cash economy to digital economy and help the government to collect more taxes when formal transaction channels are utilised more,” Imran said, addressing the launching ceremony in the federal capital.

Imran said that cash economy was one of the biggest hurdles for a country of 222 million to take full advantage of its potential. “Cash economy’s biggest disadvantage is tax collection; Pakistan collects the lowest tax in the world,” he said.

The prime minister regretted that only 2 million people paid taxes in a country of 220 million population, while the top-3,000 taxpayers paid 70% of the total taxes. “This is not enough to build hospitals and schools, and provide other basic facilities of life for the common man.”

The prime minister hoped that Raast will slowly and gradually take the country away from the addiction of cash economy to the digital economy and enable the country to take full advantage of its people. He said that Raast programme would take government’s other initiatives, including Ehsaas, ahead.

“The real target is to boost formal economy and our biggest problem is that we have a big informal economy,” he said, adding that the government could neither collect taxes in the presence of a big informal economy nor the country could progress. “Without revenues, there is no progress,” he said.

Prime Minister Imran said that “Pakistan can’t build infrastructure; can’t invest in human development; unable to provide education to children; can’t improve healthcare infrastructure” just because it lacked financial resources.

“The country which was making rapid progress in the region 50 years ago can’t move ahead because we don’t have enough financial resources,” he said, hoping that “Raast will take the country away from addiction of cash economy.”

Imran lauded the step of including the poor segments of society, women and overseas Pakistanis in Raast, saying it was also a big step. “Opening women’s accounts is a big step as it would help them progress,” he said, adding that women in rural areas were affected the most by poverty.

He lauded State Bank of Pakistan (SBP) Governor Reza Baqir, his team and several others, who made the project a reality. He encouraged them to keep thinking about bringing more remittances through formal channel and shifting more and more people from cash economy to digital one.

He thanked Queen Maxima of the Netherlands for taking interest in the programme and wellbeing of Pakistan, especially, in women living in deprived areas and wanting their financial inclusion in Pakistan. He also thanked the Gates Foundation, British High Commission and the World Bank for providing help to Pakistan.

In his address, the SBP Governor said that Raast would make payments secure, while the banks and monetary institutions will get benefits as it provided fast and cheap digital payment option for customers.

He added that it had been developed on international best practices as it would connect government institutions instantly, which meant that salaries, pensions as well as savings could instantly be paid through it.

Comment by Riaz Haq on January 17, 2021 at 10:40pm

How Raast will enhance Pakistan’s digital economy

https://www.thenews.com.pk/print/775964-how-raast-will-enhance-paki...

Naysayers may question that when several private-sector digital cash transfer systems that do not require a bank account – such as JazzCash, operated by telecommunications company Jazz, and Easypaisa, operated by telecommunications company Telenor Pakistan – are already available locally, what is the efficacy of Raast? They should know that Raast would be the first platform to link government entities and financial institutions. It also promises numerous other benefits, which merit examination.

The salient features of Raast include instantaneous payments: near real-time digital payments across individuals, merchants, businesses, and government entities; low-to-no transaction costs for end users; Raast is designed to operate at a cost recovery model to make digital payments affordable to end users of all socio-economic backgrounds; full sector-wide interoperability: Raast will allow all financial institutions to seamlessly connect to each other via a single link to the central infrastructure, making digital payments accessible across any channel to customers of any financial institution; customer-centric innovative products/services; Raast will be built on cutting-edge technological standards, allowing financial institutions to develop innovative and user-friendly digital payment products and services like payment through phone number or email; and reliability and enhanced security; Raast will introduce more secure payment types, ensure that each transaction is authorized by the payer, and offer enhanced data protection and fraud detection services.

Pakistan currently faces a myriad of financial problems, which hamper its growth as well as place impediments in the fruition of development goals. Primary among them is the weak or low tax base.

According to figures provided by the Prime Minister, only two million people in a country of 220 million paid taxes, which was not enough for the desired social uplift of society involving the construction of hospitals, schools and providing other basic facilities of life for the common man. Imran Khan states that only 3,000 of the taxpayers pay 70pc of the tax. It is notable that his government has taken steps to automate collection of taxes on transactions and also tightened rules on banking but is still falling short of targets.

Thus, shifting away from a cash-based economy may be a logical step to broadening the tax base as well as tackling corruption.

Currently, remittances from abroad constitute using informal systems like hawala and hundi, which besides being illegal, manage to keep the transaction off the books and encourage money laundering. The instant payment system would not only document the economy, but also generate more taxes to help build the country. Pakistan’s ability to curb illegal financial transactions, including the alleged financing of militant and extremist groups, has been under close scrutiny from international financial watchdog the Financial Action Task Force (FATF). Hopefully, the revolutionary digital system will help Pakistan avoid the hangman’s noose of being blacklisted by FATF.

It is pitiable to see old pensioners including widows of government servants, lining up even in inclement weather to draw their pension from financial outlets and post offices, since they lack the capacity to open bank accounts. Raast will enable government payments, including salaries and pensions, to be made through it, as well as disbursements for nationwide financial support programmes, such as the Benazir Income Support Programme, and the Ehsaas Emergency Cash programme.

Comment by Riaz Haq on February 19, 2022 at 4:50pm

Digital transactions record robust growth


https://www.dawn.com/news/1653511

According to the State Bank’s latest Annual Payment Systems Review (PSR) for FY21 issued on Friday, the transactions processed through the SBP’s large-value payments segment, known as Real-time Inter-Bank Settlement Mechanism (PRISM), recorded a growth of 60 per cent by volume and 12.8pc by value.

As of June 30 this year, the PRISM system had 51 direct participants — 34 banks, seven microfinance banks, nine development finance institutions and one non-bank entity (Central Depository Company). During FY21, PRISM processed 4.2 million transactions amounting to Rs444.6 trillion.

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    Biden's Gaza Ceasefire Veto Defies American Public Opinion

    Aaron Bushnell, an active serviceman in the United States Air Force, burned himself to death in front of the Israeli Embassy in protest against the US policy in Gaza. Before setting himself on fire in what he called an "extreme act of protest", he said he would "no longer be complicit in genocide". Polls show that the vast majority (63%) of Americans want an immediate end to the carnage being perpetrated by Israel in Gaza.  …

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    Posted by Riaz Haq on February 27, 2024 at 5:30pm

    Pakistan Elections: Imran Khan's Supporters Skillfully Used Tech to Defy Powerful Military

    Independent candidates backed by the Pakistan Tehreek e Insaf (PTI) party emerged as the largest single block with 93 seats in the nation's parliament in the general elections held on February 8, 2024.  This feat was accomplished in spite of huge obstacles thrown in front of the PTI's top leader Imran Khan and his party leaders and supporters by Pakistan's powerful military…

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    Posted by Riaz Haq on February 16, 2024 at 9:22pm — 1 Comment

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