Digital transactions make up 83pc of 844m retail payments done by banks, EMIs

KARACHI: Digital transactions’ share in retail payments by banks and regulated non-banking entities has been consistently rising in Pakistan, as technological advancements introduce innovative payment methods, the State Bank of Pakistan said on Friday.

During the third quarter (January-March) of the fiscal year 2023-24, digital transactions (including ATM cash withdrawals) accounted for 83 per cent of the 844 million total retail payments processed by banks and electronic money institutions (EMIs), while the remaining 17 per cent were over-the-counter (OTC) transactions at banks’ branches, according to the quarterly payment systems report, issued by the SBP.

The growth in digital transactions is largely attributable to fund transfers, bill payments, payments for goods and services, and mobile top-ups.“Moreover, customers are more reliant on ATMs, compared with bank branches for cash withdrawals for their daily needs,” the report said.

“It is also notable that the network of 18,655 ATMs across the country maintained an average uptime of 96.5 per cent during the quarter,” it added.Digital wallets and instant payments remain key drivers of digital transactions. Mobile banking transactions continue to be the most preferred option with a share of 43 per cent in digital transactions during the quarter, reaching 301 million, amounting to Rs12,955 billion, according to the report.

Internet banking transactions grew by 3.0 per cent, reaching 59 million, amounting to Rs6,467 billion. In-store purchases through point-of-sale (POS) machines also grew, with volume increasing by 8.0 per cent to 71 million and value by 6.0 per cent to Rs394 billion.

E-commerce (only card-not-present) transactions however posted a decline of 13 per cent in volume, reaching 10 million but increased by 3.0 per cent in value reaching Rs52 billion. A majority of POS merchants are retail outlet stores, clothing and apparel outlets, restaurants, and fuel stations whereas clothing and apparel online stores are the most common type of e-commerce merchants, it said.

Raast, Pakistan’s instant payment system processed 140 million transactions totalling Rs3,437 billion in the third quarter of FY24, marking a 31 per cent increase in volume and a 48 per cent increase in value from the previous quarter.

This significant growth underscores Raast’s crucial role in the nation’s payment landscape. Furthermore, 1.5 million transactions amounting to Rs315,596 billion were settled through PRISM (RTGS), including settlement of government securities, funds transfers, and ancillary clearing transactions.

The national payment system plays an important role in supporting the economic activities of a country by enabling secure and efficient financial transactions.“Despite high currency in circulation in the Pakistani economy, we observe that technological advancements are introducing innovative payment methods, allowing existing and new payment service providers to leverage the prevailing/established payment infrastructures,” the report said.

“Most importantly, consumers and businesses are increasingly embracing digital payment methods, thus contributing to a shift towards a more digital payments ecosystem in the country.”