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KARACHI: Digital payments continue brisk growth as Pakistan Real-time Interbank Settlement Mechanism (PRISM) recorded a total of 1.1 million transactions amounting to Rs159.1 trillion during the first quarter (July-Sep) of this fiscal year (FY22). These transactions, in terms of value, are some 7 percent higher than the preceding quarter (April-June FY21), in which worth Rs 148 trillion transactions were registered.

According to State Bank of Pakistan’s (SBP) first quarterly Payment Systems Review (PSR) report issued on Monday, the journey of migrating from a cash intensive economy towards a digital economy is gradually increasing. E-banking transactions volume-wise showed 12 percent growth to 362 million and value-wise 16 percent growth to reach Rs 27.189 trillion during the July-Sep of FY22 compared to 323.4 million transactions worth Rs 23.4 trillion in April-June of FY21.

Two major areas where high adoption in digital payments was witnessed are mobile and internet banking. This uptake was majorly spurred by 11.3 million mobile banking users. The number of transactions conducted via mobile banking channels was 79.1 million with a value of around Rs 2.2 trillion, showing a QoQ growth of 29 percent by volume and 36 percent by value.

Internet banking also contributed to the growth of e-Banking services by registering 31 percent growth in internet banking users. Overall, 29.6 million internet banking transactions amounting to Rs 1.89 trillion were conducted during the first quarter of this fiscal year as against 28 million transactions of Rs 1.72 trillion in the preceding quarter, showing an increase of 6 percent in volume and 10 percent in value.

SBP launches licensing and regulatory framework for digital banks

According to report, the impact on overall e-banking of low growth in a couple of areas was subdued by higher growth in other key areas. The shift to digital during the peak of pandemic is likely to translate into a behavioral change. The ease and comfort enabled by e-commerce in specific has compelled a major chunk of consumer to stick with digital banking.

Retail sector continued to show adoption of digital payments. Overall e-Commerce transactions recorded an impressive QoQ growth of 87 percent by volume and 21 percent by value, though the number of e-commerce merchants remained almost the same as of the last quarter. During the quarter under review, 12.7 million e-commerce related transactions amounting to Rs 22.3 billion were conducted using digital payment channels.

Call Center/IVR banking showed a decline of 21 percent by value, even as its volume grew by 1 percent. This indicates that people are now graduating to other mediums, ie, internet and mobile banking. Digital adoption by merchants showed mixed signs of growth. Number of e-Commerce Merchants reduced to 2,993 from 3,003; however, the number of POS machines increased by 10 percent to 79,134 machines. This can mainly be attributed to ease down of lockdown restrictions, the PSR said.

According to the SBP, as the brick and-mortar stores opened up and the footfall in the market gained momentum, the demand and usage of POS terminals has increased. The impact of the lower number of ecommerce merchants however did not translate in the transactions volume and value.

As of end-September 2021, there were 46.2 million total cards in circulation which mainly comprised Debit Cards (64 percent), Social Welfare Cards (22 percent), ATM only Cards (10 percent), Credit Cards (4 percent), and Prepaid Cards (0.3 percent). During this quarter, QoQ increase of 5 percent in volume of paper-based transactions and 3 percent increase in value of paper-based transactions was also observed which may be attributed to people returning to traditional channels (i.e. branches) as pandemic related restrictions were lifted.

The first quarter of FY 22 ushered the domestic fintech landscape into a new era whereby the first two Electronic Money Institutions (EMIs) were granted the commercial license. Back in 2019, State Bank of Pakistan had issued EMI regulations with the objective of increasing financial inclusion and encouraging the migration of the economy towards digitalization. As more EMIs enter the market, it is expected that innovative payment services would entice the traditionally unbanked population to come under the fold of the formal economy. Ultimately, this will contribute to fostering a more digitally integrated economy.

Copyright Business Recorder, 2022

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