Payment systems: paper-based, e-banking transactions decline in July-September: SBP report

The volume of paper-based retail payments and e-banking transactions in the country is gradually on decline and posted a decline of 9 percent and 2 percent respectively during the first quarter (July-September) of the current (2010-11) fiscal year (FY11).
According to State Bank's First Quarterly Report on 'Payments Systems', released on Tuesday, the volume and value of paper-based retail payments during the quarter under review were Rs 82.959 million and Rs 35.60 trillion, showing a decrease of 9.44 percent in number of transactions, and 12.18 percent in value of transactions, compared with the previous quarter. The contribution of paper-based payments in total retail payment transactions was 61.20 percent in terms of volume and 88.45 percent in terms of value.
In addition, the volume and value of e-banking transactions in the country during the quarter reached Rs 52.58 million and Rs 4.7 trillion respectively, showing decrease of 1.89 percent in volume and 3.56 percent in value, compared to 6.2 percent increase in volume and 7.7 percent increase in value in the previous quarter. Its contribution to total retail payment transactions was 38.80 percent in terms of volume and 11.55 percent in terms of value.
The report said that the scope of payment systems infrastructure in the country increased during the first quarter (July-September) of the current 2010-11 fiscal year (FY11) as a total of 99 automated teller machines (ATMs) were added to the e-banking infrastructure, bringing the total number of ATMs to 4,562 in the country. Some 60 more bank branches have been upgraded to Real Time Online Branches (RTOBs) while the number of plastic cards (ie ATM, Debit and Credit Cards) also increased by 5.23 percent, compared to the previous quarter.
The Report said that the value of ATM transactions increased by about 5 percent to Rs 262,524 million while maintaining the number of transactions at the level of the previous quarter, thus increasing the average value per transaction to Rs 8,486 compared to Rs 8,037 in the previous quarter. It said the contribution of other modes of e-banking was also on the rise despite comparatively insignificant numbers and aggregate value of transactions and added that the utility bills payments through available modes (ATMs, internet, mobiles, etc) of e-banking transactions were also growing.
According to the Report, the number of cross-border transactions increased by 154 percent in volume, and 19 percent in value, during the quarter under review. The large value payments settled through Pakistan Real-time Interbank Settlement Mechanism (PRISM), however, decreased by 6.51 percent in volume and 11.35 percent in value of transactions in comparison to the previous quarter. The major portion of PRISM transactions, in terms of value, consisted of securities settlements which accounted for 47 percent of total transactions, followed by Interbank Funds Transfers (37 percent), and Settlement of Retail Cheques Clearing (16 percent), the Report added.
It may be mentioned here that safe, efficient and reliable payment systems are vital part and backbone of financial infrastructure of a country which provide the essential base for financial stability. The primary goal of a payment system is to enable fast and risk-free circulation of money in the economy, an essential prerequisite for satisfying timely payment obligations and improve liquidity in the financial markets.