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KARACHI: The E-banking transactions continued a steady growth and rose to Rs 35.422 trillion in the third quarter of this fiscal year (FY22).

According to third quarterly report of Payment Systems for the Fiscal year 2021-22 released by the State Bank of Pakistan (SBP), concerted efforts by the SBP to push the digital payments adaption have been driving the growth in e-banking as it grew by 2.6 percent in volume and 6.5 percent in value during the third quarter of this fiscal year. The overall growth was 32.7 percent in volume and 57.5 percent in value on YoY basis.

As per SBP, some 411 million e-banking transactions amounted to Rs 35.422 trillion were recorded in Jan-March of FY22 compared to 400 million of Rs 33.260 trillion in Oct-Dec of FY22.

This uptake in e-banking was mainly spurred by 7.6 million internet banking users.

Further bifurcation shows that a major portion of this growth was driven by continuing widening in internet banking and mobile banking transactions.

Number of registered internet banking users reached 7.6 million showing a growth of 10.6 percent resulting in a double digit-growth of 13.5 percent and 20 percent in volume and value of transactions respectively on QoQ basis. Through this channel a total 38.3 million transactions worth Rs. 2,906.9 billion were processed. Mobile banking transactions volume was 101.5 million with value of Rs. 3,085.8 billion which amounted to a growth of 8 percent and 5.4 percent respectively on QoQ basis.

During the quarter under review, Pakistan’s payment ecosystem showed a slight increase in number of transactions while value of transactions showed a marginal decline.

Electronic Money Institutions: here is a list of all SBP-authorised EMIs in Pakistan

The decline in value of transactions stemmed from the decline in value of Pakistan Real-time Interbank Settlement Mechanism (PRISM) transactions, in particular government securities.

Currently, State Bank operating two payment systems including PRISM commonly known as RTGS, and Raast (Micropayment gateway). During the third quarter of FY22, PRISM recorded a total of 1.08 million transactions amounting to Rs 155 trillion recording a decline of 5.8 percent by volume and 3.5 percent by value against 1.14 million transactions worth Rs 161.315 trillion in second quarter of FY22 due to decline in both volume and value of government securities under the head of PRISM transactions.

Under retail sector, POS transactions continued to show an upward trend. During this period, number of POS terminals installed reached to 96,975 as compared to 92,153 in the previous quarter, showing an increase of 5.2 percent. Through these POS terminals, a total of 38.3 million transactions were processed that amounted to Rs. 189.7 billion in value. This shows quarterly growth of 22 percent in volume and 6.5 percent in value of transactions.

However, a decline of 1.2 percent was witnessed in mobile baking users as a financial institution shifted its old mobile banking platform to new platform and in the process, unregistered all those users from their database who never availed the service in old platform. Regarding digital infrastructure, commercial banks are expanding their digital ecosystem to further drive electronic payments which is also complemented by SBP policies. In this regard, 188 new ATMs were installed across the country by the industry reaching a total of 16,897 as of Q3-FY22.

Number of ATMs reached 16,897 with transactions volume and value of 171.3 million and Rs. 2.437trillion respectively. Similarly, number of e-commerce merchants on boarded with banks also showed a double-digit growth of 12 percent reaching to 4,445.

A total of 9.1 million e-commerce transactions were conducted which amounted to Rs. 27 billion during the quarter. Both volume and value showed an impressive growth of 62.8 percent and 77.1 percent respectively, on YoY basis, in case of e-commerce transactions.

Paper based transactions declined by 3 percent in volume though its value remained almost at the same level posting only 0.6 percent growth over the previous quarter.

The reason in decline in volume can be inferred as an increase in usage of digital channels by customers.

As of end-March 2022 total of 47.2 million payment cards were in circulation at the quarter end of Q3-FY22. Those payment cards mostly comprised of debit cards (62.3 percent), social welfare cards (23.3 percent), ATM only cards (10.3 percent), credit cards (3.7 percent) and lastly pre-paid cards (0.3 percent). The reason for this decline is discontinuation of magnetic stripe/non-EMV cards from January, 2022 to comply the regulatory directives in order to curtail the risk of card-skimming.

According to the SBP, a new EMI, M/s CMPECC, was granted the commercial license in Q3-FY22, which will drive the digital payment landscape further, while the existing two EMIs, namely M/s Finja and M/s Nayapay, have also continued to strengthen their presence.

As more such players enter the market, the objective of improving financial inclusion will also increasingly materialize.

State Bank had issued EMI regulations in 2019 to promote financial inclusion and shift the economy towards digitization.

The innovative digital payment solutions offered by such non-traditional Fintechs are expected to drive the admission of unbanked population to formal economy, thus increasing digital adoption in the country.

Copyright Business Recorder, 2022

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