Pakistan seeing growing trend of digital payments
Recent data disclosed by the State Bank of Pakistan (SBP)
illuminates a noteworthy shift in Pakistan's financial dynamics, showcasing a
growing inclination towards digital payments and a departure from traditional
paper or cash-based transactions.
As per the SBP report, the first quarter of the fiscal year
2023-24 witnessed a substantial reduction in the currency in circulation,
coupled with a noticeable uptick in digital payments. The central bank defines
payment instruments as physical or virtual tools facilitating financial
transactions, encompassing banknotes, coins, negotiable paper-based
instruments, payment cards, digital wallets, and bank accounts.
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As of the quarter concluding in September 2023, the currency
in circulation amounted to PKR 8,287.8 billion, marking a significant decrease
from PKR 9,148.7 billion in the preceding quarter. This considerable drop in
physical currency, alongside the surge in digital payments, indicates a clear
trend in consumer preferences, signaling a growing preference for electronic
payment methods over traditional cash-based transactions.
Key drivers fostering the digitalization of payments and
promoting financial inclusion include bank accounts, digital wallets, and
payment cards. The SBP report revealed that by June 2023, there were 85.6
million bank accounts, complemented by 111.0 million Branchless Banking
Accounts and 2.4 million EMI-issued digital wallets by the end of September
2023.
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In Pakistan, two prevalent types of digital wallets
exist—one issued by Branchless Banking service providers and the other by
Electronic Money Institutions (EMIs). As of September 2023, there were 61.3
million Branchless Banking wallets and 2.4 million E-wallets issued by EMIs.
The collective issuance of payment cards by Banks, Microfinance Banks (MFBs),
Branchless Banking Service Providers, and EMIs reached 54.3 million. Notably,
79% of these cards were debit cards, 17% were social welfare cards, 4% were
credit cards, and less than 1% were prepaid cards.
This data underscores the burgeoning role of digital
financial services in shaping the country's payment landscape. The convenience,
accessibility, and efficiency offered by digital payment methods have
contributed to their rising popularity among consumers and businesses alike.
This trend aligns with global efforts to transition towards a more cashless
society, emphasizing the advantages of enhanced security, transparency, and
financial inclusion.
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As Pakistan continues on the trajectory of digital transformation
in the financial sector, regulators, financial institutions, and technology
providers are poised to play pivotal roles in ensuring the robustness,
security, and accessibility of digital payment infrastructure nationwide. The
SBP remains vigilant, closely monitoring these developments and actively
working towards creating an environment conducive to the sustainable growth of
digital financial services in Pakistan.
Source: pkrevenue.com