- Use of cash promotes informal economy and helps illegal activities, on the other hand by using the Raast one is doing the right thing by transacting using formal digital Financial Service and contributing to Pakistan's economy.
- SBP along with Karandaaz Pakistan has developed this new system for processing instant payments.
- The Prime Minister in his address said a cash-based economy is the biggest hurdle in tapping the true potential of Pakistan.
In a major stride towards achieving greater efficiency in sending and receiving payments and digitisation of the economy, Prime Minister Imran Khan on Monday launched the country's first instant Digital Payment System called 'Raast.'
In his address at the Raast- Digital Payment System launching ceremony in Islamabad, Prime Minister Imran Khan said that the State Bank of Pakistan's (SBP) latest effort would allow Pakistan to slowly move away from being a cash-based economy to a digital economy.
The Prime Minister in his address said a cash-based economy is the biggest hurdle in tapping the true potential of Pakistan. "Cash-based economy badly affects tax collection, which is evident with the fact that only two million out of 220 million people are tax filers, while 30,000 of taxpayers make 70 percent of the total tax collection in the country," he said.
PM said digital Pakistan is a step forward from a cash-based economy towards the point, where we can take maximum benefit of our 220 million population.
The Prime Minister also congratulated SBP for working on this initiative of 'Raast' and bank efforts for engaging overseas Pakistanis in convincing them to send remittances through formal channels.
He said foreign remittances have significantly improved as a result of these efforts. He said our Current Account Deficit has become a surplus, which has reduced pressure on the rupee.
Earlier, addressing the ceremony Governor SBP, Reza Baqir highlighted the features of the upcoming system.
"As this system moves forward, and as we get government departments integrated into the system, employees of the government will get their salaries, pension at an instant. Savers, who have to wait in line at National Saving centres will get the payments within seconds and Ehsas Emergency Cash Program another example, which once integrated will allow the payments to be made in seconds," he said.
"All of these payments, inconveniences, opportunities for officials to create inconveniences in the way of our people will be eliminated once the system Raast is fully launched," said Baqir.
SBP along with Karandaaz Pakistan has developed this new system for processing instant payments. This new system called 'Raast' will address payment system infrastructure-related issues.
Baqir said that International experience has shown that an instant payment system of the sort the State Bank of Pakistan (SBP) is launching today 'revolutionizes' financial inclusion. "It does so by making it easier for people to transact," he said.
Baqir said that the launch of this system would allow businesses to come with customize financial products and offers for its customers. "Each such transaction done through Raast will create a digital history, which will allow banks, as well as fintech, to offer financial customize products to them."
Governor SBP said that apart from revolutionising financial inclusion, the Raast system also helps in achieve another goal of the government that is its fight against corruption. "It does so by reducing and hopefully eliminating the need for cash. Cash is the lifeline of corruption, by making people move away from cash not by compulsion but by offering an attractive alternative, Raast will reduce the lifeline of corruption and for this reason, we have called the instant payment system 'Raast' meaning the direct way."
Raast is an Urdu word that has a very important connotation for Pakistan. One, it means the direct path for the shortest distance between two points. Second, it identifies with the right path to choose and that's the message being conveyed here.
Talking about the Roshan Digital Accounts initiative, the SBP chief said that to date more than 70,000 accounts have been opened. "Every day, 500 to 1000 accounts have been opened, and already about USD280 million have been sent into these accounts," he said.
Remittances from Overseas Pakistani are at a 'record-breaking' level and have been about USD2 billion every month since the beginning of this fiscal year.
"Domestically in Pakistan, we have had an explosion in the use of digital and online channels to make payments. During the first quarter of this fiscal year, the number of transactions through mobile banking channels rose to 236 million, representing a growth of 140 percent over last year," informed Baqir.
He shared that the amounts that have been sent through these channels have increased to Rs 900 billion in the first quarter of this fiscal year displaying a growth of over 200pc over last year.
On the construction sector, SBP Governor said that the construction sector is 'alive' and banks are looking for clients. "Banks have trained and are training employees to facilitate clients who come into the branches looking to benefit from PM's mark up subsidy scheme to promote low- cost housing," he said.
Under the SBP's vision, when a customer uses Raast for making payments in one's day-to-day transactions, you move away from cash and gets included in the formal financial system. The use of cash promotes the informal economy and helps illegal activities, on the other hand by using the Raast one is doing the right thing by transacting using formal digital Financial services and contributing to Pakistan's economy.
Raast Instant Payment System is an advanced retail payment system developed based o international standards such as ISO 20022 and other digital financial inclusion principles like the Level one Principles. It will become the core component of Pakistan's payment infrastructure and will allow every individual to send and receive the payments instantly in a safe, secure manner.
Features of Raast Instant Payment system:
Fast- Provide the end-user a near real-time payment experience
Low cost- Operate on a cost-recovery mindset to provide low transaction cost to participants
Interoperable- Allow payments from and to any channel
Simple- Improve adoption and convenience through a Universal payment ID (example mobile numbers, CNIC for an alias may be used in lieu of complex account numbers)
Secure- Provide ample verification options to ensure the funds are safe and the system is also well protected and ensure secure data protection and authentication throughout the ecosystem
Highly accessible- Allow simpler and broader onboarding for payment entities such as banks, payment system operator and payment service providers, merchants, government entities via APIs and ensure system processes transactions 24/7 in real-time
Innovative- Allow participants to design new payment and financial services/products
Rollout of Raast Instant Payment System
Raast Instant Payment System will be rolled out in a phased manner. In the first phase, the system is ready to enable instant transfer of bulk payment such as dividend payments of CDC directly into the bank accounts of investors. Subsequently, the second phase will follow, in which Raast Instant Payment System will enable the onboarding of government entities to digitise payments and receipts such as salary, pensions, and payments to Ehsaas and BISP beneficiaries.
In parallel, SBP will digitise all Person-to-Person payments (P2P) using mobile phone numbers in place of account numbers by July 2021. This will be followed by the third and final phase of Raast rollout plan early next year when merchants and small businesses will be enabled to receive instant payments from the customers through different payment modes such as Request to Pay (RTP) and QR payments functionality.