The Prime Minister in a ceremony held at the PM House launched Raast, a payment interface being developed by the SBP. The payment interface being aptly branded as Raast, a smart play on the word, ‘raasta’ – paving way for economic prosperity through digitization of payments, and eventually the formal economy at large.
Raast can truly catalyze a paradigm shift regarding how transactions are executed in the country, enabling hefty economic dividends in the process. Raast is essentially a universal payment interface, which has the ability to not only connect financial institutions, but also other entities involved in commerce to a payment gateway through an API (Application Programming Interface) through a standardized set of protocols.
Raast has the potential to upend legacy systems and increase transaction processing ability by more than a thousand times. Earlier payment systems were rigid, necessitating an arduous onboarding, and integration process. The advent of Raast has the potential to make systems more modular, and make the integration process easier, thereby making the process more democratic, and economically value accretive.
The initial use-case that is being envisaged for Raast pertains to dividend payments, something that is already being done through legacy systems. However, the same can be done through Raast in a more efficient, and faster manner. Another groundbreaking use-case would be minimizing, and eventually eliminating the operational delays and lead-time associated with clearing of cheques, and other banking transactions. Legacy systems do not have the capacity, and modularity to quickly millions of cheques processed on a daily basis. Raast will have the bandwidth to make the process more efficient, and squeeze the time lag that exists for payments.
Raast provides the rails, or the infrastructure on which various financial services can be stacked upon, upending the legacy control of financial institutions in providing similar services. Through access to Raast, it will now be possible for emergence of more payment processors, who can catalyze adoption of QR codes, and other payment mechanisms at a cost which isn’t restrictive, but rather supports market expansion.
Non-banking financial services providers such as asset management companies, and brokerages can also connect to Raast and support development of capital markets. The formation of a local alternative of Robinhood, or Zerodha can be catalyzed by Raast, where through an intuitive interface it will be possible for retail investors to invest in the equity or bond markets, with just a few taps on their screen. There is an infinite number of use-cases, a growth mindset from the Regulator, and the private sector alike is what is required.
The impact of Raast is expected to be far-reaching, and would decrease the prevalence of cash in the economy, while pushing up capital flowing in the formal economy, thereby documenting the same in the process. Raast is one of the many tools that can be leveraged to document the economy, and eventually increase overall tax collection through increased activity in formal economy.
The foundations of a Digital Pakistan are now being put into place – however, that needs to be built on top of an identity stack, with the latter playing a crucial role in making the customer onboarding process simple, and intuitive. An identity stack largely covers leveraging a digital identity which already rests with NADRA to catalyze customer acquisition, while ensuring that the customer onboarding process is frictionless. It is expected that any such kinks would be ironed out to make Raast a resounding success.
Cash has been a drag on the economy. Reducing prevalence of cash in the economy will yield an economic dividend, the impact of which can be much higher than any other direct policy intervention. The future is digital. The future is cashless.