Cattle markets saw Rs360m digital transactions during Eid: SBP

KARACHI: This Eidul Azha saw a significant shift towards digital transactions in Pakistan’s cattle markets, with transactions totalling Rs360 million facilitated through Quick Response (QR) code payments.

The State Bank of Pakistan said in an email response to The News’ queries that it started the project to enable digital acceptance at cattle markets to digitalize this cash-oriented payment stream and introduce QR codes as a convenient payment mechanism.

The SBP provided data on 48 cattle markets nationwide. Eighteen banks participated in the project, a component of the SBP’s Raast instant payment system. As part of the initiative, 4,067 merchants were onboarded to accept payments through QR codes and international bank account numbers (IBANs). A total of 12,356 transactions, with a combined value of Rs360 million, were processed using these payment methods.

The SBP allowed regulatory relaxations in the transaction and balance limits to facilitate the opening and usage of cattle sellers’ accounts, according to the SBP.

“Overall, the project witnessed a favourable response, both from people and cattle sellers. Those who benefitted from the payment mechanism expressed their satisfaction with digital solutions,” it said.

This provided a safe and secure mechanism for high-ticket payments, the SBP said and added that on the one hand, it eased the customers/buyers by eliminating the need to carry hefty cash amounts to the cattle market; on the other, it saved the cattle sellers from the hassle of keeping cash safe with them and then taking it back to their hometown.

This initiative also brought many cattle sellers into the banking network, which was previously excluded from the formal financial system, it said.

“Through the initiative, the banks were able to explore new avenues and strengthening their linkages with the livestock sector for the digitalisation of its payment streams.”

Pakistani households spend significant amounts to buy animals to sacrifice during the religious occasion of Eidul Azha, generating an economic activity worth billions of rupees. However, its contribution to the country’s revenue remains minimal because the transactions in the livestock markets are not documented, and the supply chain is informal.

According to the Pakistan Tanners Association, over the three days of Eid (June 17-19), more than 6.8 million animals were sacrificed in the country, with a total value of over Rs500 billion.The SBP is increasing its efforts to digitize payments and decrease the amount of currency in circulation (CIC) as part of its strategic objective. However, the CIC climbed by 7.4 per cent in June, indicating that cash was used for the majority of Eidul Azha spending.According to SBP data, one bank deployed cash deposit machines (CDMs) in the livestock markets of Karachi and Faisalabad to enable traders to deposit cash immediately. A total of 655 transactions totalling Rs200 million were handled through CDMs.

JazzCash, the leading fintech platform, serving over 44 million customers, facilitated the most widespread interoperable RAAST QR digital payments campaign across 45 cattle markets in 16 cities, contributing more than one-third of all the transactions done through QR in the industry during this Eid season. President of JazzCash Murtaza Ali mentioned that by onboarding 300 merchants, JazzCash facilitated over 5,000 QR-based transactions amounting to around Rs85 million.

“We also raised awareness among buyers and sellers on the benefits of using digital payments in various cities with dedicated stalls,” Ali said.

“This innovative approach paves the way for greater financial inclusion and a more documented economy," Ali added.

“This is just the beginning. With policies that incentivize digital payments, we can build upon this momentum to build a cashless ecosystem that is inclusive, agile, and transparent."

“We are witnessing encouraging uptake in digital financial services,” Ali said.

According to him, in 2023, JazzCash achieved an 82 per cent year-over-year revenue surge driven by a gross transaction value of Rs5.8 trillion.

The SBP’s quarterly payment systems review for the October-December fiscal year 2024 states that in the near future, person-to-merchant (P2M) QR payments will further increase the share of digital payments in retail payments.

An interoperable Raast P2M service was launched by the SBP last year to help companies and merchants accept digital payments. This enabled businesses to take payments using QR codes, Raast Alias, IBAN, and request to pay. Raast handled 107 million transactions worth over Rs2 trillion in the second quarter of FY24. Since its introduction in January 2021, 343 million transactions worth more than Rs7 trillion have been handled using it.

easypaisa, a digital payments platform, stated that it facilitated QR code transactions at over 200 merchants in major cities. However, it did not disclose the overall value of transactions it processed through this mechanism.

“The project’s objectives were to give cattle farmers and merchants access to a wider range of financial services, improve the financial inclusion of rural and semi-urban areas, and integrate them into the digital economy,” it said.

Itcited challenges related to awareness. There was reluctance from both traders and buyers, who were uncertain about the QR payment mechanism and whether their money would reach the designated recipient. Additionally, the use of non-smartphones and burner phones proved challenging, given their inability to scan QR codes, easypaisa noted.

Zindigi, a finance app powered by JS Bank, in a statement, said through this initiative, farmers and merchants were able to gain greater control over their financial transactions, while Zindigi’s focus on contributing to the broader vision of a digitally inclusive Pakistan was also fulfilled.