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It remains to be seen how much the pandemic lifted mobile-wallet uptake in Pakistan. However, the branchless banking (BB) statistics as of the onset of Covid-19 reveal that growth had stalled. As per recent SBP data, the number of BB accounts (also known as m-wallets) stood at 48.3 million as of March end 2020. It’s a paltry increase of 5 percent, or just over two million accounts, over December 2019.

This is one of the lowest quarterly growth in m-wallets in recent times. But it’s not without reason. In previous years, telco’s (which own most of BB service providers) were in a rush to show big numbers on this front, but it spread a lot of “inactive accounts” in the system. Active accounts have been defined by SBP as accounts which either opened in past 180 days or did at least one transaction in that period.

However, this race invited SBP’s intervention early last year, weeding out many such accounts from the system. As a result, the number of accounts had whittled down by a massive 16 million between March and June 2019. After the cleanup, total number of accounts stood at 35 million as of June 2019. Since that starting point, the m-wallet indicator seems to have behaved. Growth has normalized.

Still, there isn’t a sea-change in account activity levels, though. Prior to the cleanup, “active” accounts stood at 41 percent, as of March 2019. In the immediate reporting period after, active accounts had improved to 62 percent by June 2019. But a year since the cleanup, there is backsliding as active accounts, tallying 27.7 million as of March 2020, equated 57 percent of the total number of accounts.

Every two out of five accounts being inactive isn’t exactly the panacea to drive financial mainstreaming. But there is also some optimism in the recent numbers. For one, the average daily transactions are approaching five million. Also, the m-wallet transactions in the Jan-Mar quarter achieved a volume that was 8 times that of over the counter (OTC) transactions. The ratio was 6 times in the preceding quarter.

There is a need to focus on usage of these accounts. The key is to manage a sustained increase in activity ratio so that active wallets are a least 80 percent of the overall accounts. For that, the service providers need to improve their products and become interoperable across platforms. The central bank also needs to proactively guide the market towards achieving the government’s financial inclusion targets.