UN official highlights cash culture as barrier to digital payment
adoption in Pakistan
In an interview with daily The News, Camilo Téllez, Deputy
Managing Director of the Better Than Cash Alliance at the United Nations,
discussed the challenges hindering the adoption of digital payments in
Pakistan. Téllez emphasized that the deeply rooted cultural reliance on cash in
the country requires significant behavioral shifts, necessitating time and
extensive awareness campaigns.
Addressing the challenges faced by Pakistan in adopting
digital payments, Téllez pointed out the multifaceted interplay of cultural,
economic, and infrastructural factors. Despite efforts by the government and
the State Bank of Pakistan to promote digital payments, the perceived
simplicity and reliability of cash continue to dominate transactions.
Pakistan
witnesses a decline of approximately Rs. 1 trillion in cash supply
Téllez highlighted the economic context, pointing out that
affordability plays a pivotal role. Transaction fees associated with digital
payment solutions can deter small and medium-sized businesses with thin profit
margins, favoring cash transactions. Additionally, a lack of awareness among
smaller businesses about the benefits of digital payments poses a significant
barrier.
To overcome these challenges, Téllez emphasized the need for
a comprehensive approach, prioritizing digital payments at the highest levels
of government. He suggested fostering alignment among institutions and
launching extensive awareness campaigns to educate individuals and businesses
about the advantages of digitizing the economy.
Regarding the potential benefits of digital payments for
Pakistan's economy and financial inclusion, Téllez stressed that the adoption
of digital payments is a powerful driver of financial inclusion. It creates a
demand for digital money, leading to a decrease in reliance on physical cash
and facilitating the expansion of lending, making credit more accessible to
businesses and individuals.
State
Bank of Pakistan (SBP) appreciates impressive growth in mobile and internet
banking
In response to a question about the potential advantages of
responsible digital payments for small and medium enterprises (SMEs) and micro,
small, and medium enterprises (MSMEs), Téllez highlighted the efficiency gains,
expanded market reach, and increased access to credit that digital payments can
offer, especially for women entrepreneurs.
Regarding the approval of five digital banks by the State
Bank of Pakistan, Téllez viewed it as a positive development that could promote
competition and innovation in the financial services sector. He emphasized the
importance of adherence to interoperability mandates to ensure consumer choice
and responsible digital payments.
State
Bank of Pakistan acknowledges Ripple's XRP potential
In the final segment, Téllez discussed the support provided
by the Better Than Cash Alliance to the government and the State Bank of
Pakistan in increasing digital payments. The Alliance collaborates on strategic
efforts, ongoing research, and practical experiments to advance the adoption of
digital payments. Téllez highlighted the recently released report focusing on
the adoption of digital payments for small businesses, particularly in relation
to the State Bank of Pakistan's RAAST infrastructure.
Looking ahead, the Better Than Cash Alliance aims to
continue its collaborative efforts, engage in learning experiences, and share
insights to further the adoption of responsible digital payments in Pakistan.
Source: The News