Prime Minister Imran Khan and the State Bank of Pakistan’s (SBP) ambitious plan to introduce more financial inclusion in the country through the use of technology is gaining momentum with the phase two launch of the central bank’s flagship free instant payment system ‘Raast’, which now allows person-to-person (p2p) transfers. While online payment methods such as interbank fund transfers (IBFT) that use individual or business bank accounts or applications that act as a wallet connected to one’s mobile phone number already exist, both methods have certain limitations. Apart from a large section of the population skeptical about opening bank accounts, the process itself requires a certain amount of paperwork and verification and a limited network of branches, especially in the more remote areas, makes the use of IBFT as a means to send and receive money not very scalable. Online wallets might have more users but with low limits on the amount of how much money users with no biometric verification can move between them coupled with a cumbersome process to enhance those limits, that too to a maximum that is much lower than that of banks, this isn’t an ideal online payment portal either. In terms of subscribers, there are around 190 million mobile phone users in the country while only 80 million people have bank accounts, which means that there is a huge gap that must be filled first in order to make progress. By merging both these forms of online payment together, in that mobile phone numbers are attached to bank accounts, Raast aims to eliminate many of those shortcomings. With free transfers and a formidable backend security infrastructure that already exists with banks, this integration addresses cost and security concerns as well.
Digitisation has led to commendable growth in the past financial year with the volume and value of online transactions increasing by 30.6% and 31.1% respectively on a year-on-year basis. It is up to both the central bank and relevant ministries and functionaries of the government to ensure that this new initiative is run as efficiently as possible to ensure that maximum benefit is derived from it.
