SBP reposes its confidence in digital payment infrastructure

KARACHI: The State Bank of Pakistan (SBP) recently reviewed the country’s digital payment infrastructure and expressed full confidence that banks and service providers are well-equipped to handle the government’s push for a swift shift from cash-based transactions to a digital payment system

While speaking at a conference titled “Future Banking Summit 2024” organized by Total Communication on Monday, Syed Sohail Javaad, Executive Director, Digital Financial Services Group, SBP said that the government is keen on digitizing payments and Pakistan’s digital banking infrastructure is strongly capable of taking any high demand and pressure.

“We are sure that country’s financial system with support of the SBP will efficiently manage the government’s rising demand of digitalization. I am sure banks and vendors are all ready to pass through the digitalization pressure time, though some vendors may be in trouble,” he added.

Javaad said the government has already started paying its employees’ salaries and vendors bills via the central bank instant online payment system-Raast. The collection of revenue in taxes and other financial transactions in the government domain is also increasingly via digital platforms.

At present, the federal government is paying salaries to more than 90 percent of its employees in capital (Islamabad) via Raast. The federal government salaries, which are processed via Karachi, were processed through Raast for the first time last month, he informed.

In addition, next month, the salaries of AGP and of government employees in Punjab and in KP would also be made through Raast.

Javaad said the online financial transaction via Raast are growing at a fast pace, leading the country towards a digital economy. He said the number of financial transactions via Raast have spiked to 2.5-2.6 million a day these days from 1.8 million a day in June 2024.

The executive director said the first Rs 1 trillion worth financial transactions on Raast were done in 336 days while the last Rs1 trillion worth transaction were done recently in only 22 days. The trend is showing how fast the instant payment system Raast is growing. He said payment transaction through mobile-wallets, branchless banking, Electronic Money Institutions (EMIs), fintech and e-commerce have significantly jumped over the past five-year.

On the occasion, Carmine Grabandt, Business Development Director at Giesecke &Devrient GmbH, said that cash remains king globally. It cannot be wiped out completely and it remains important for the societies when infrastructure breaks down like at times of flooding, he added.

Yahya Khan, Chief Digital Officer, Group Head, Bank Alfalah, said almost one-third portion of cash at around Rs 10 trillion remains in circulation, causing high inflation and fueling informal economy. Banks may deploy ATM machines to collect cash from businesses which remains open after 5 when banks shut down everyday operations.

Amna Hanif, CEO, NDS Technologies, said the use of technology is redefining the future banking landscape in Pakistan. It is going to make banking economical, faster and efficient. This is evolving traditional banks to the future banks.

Besides, the one-day conference features two panel discussions including Cashless Pakistan - Challenges in Reducing Cash and Growing beyond Digital Payments and Fund Transfer - The Roadmap for Fin-techs.

Copyright Business Recorder, 2024