State Bank’s micro payment gateway likely to go live by year-end

KARACHI: The State Bank of Pakistan (SBP) plans to go live with the micro payment gateway, an instant payment scheme, by the end of this year, as part of its efforts to develop modern and robust payment systems in the country, it said in a report.

“SBP, in collaboration with international partners, experts, vendors and financial industry, has achieved various milestones. It has accomplished the major milestone of the project by ensuring deployment of the state-of-the-art infrastructure to build and operate the gateway,” the SBP said in its annual performance review for the fiscal year 2019/20 that was released last week.

“SBP is now in the final stages of going live with first use case i.e. bulk transfers including government to person (G2P) transfers, tentatively by the end 2020.” The micro payment (MPG) is a state-of-the-art, interoperable and secure payment platform that would enable consumers, merchants and government entities to exchange funds in a seamless, instant and cost effective manner.

It has advanced functionalities to process instant/near real-time and alias based payments, bulk transfers and request-to-pay and capability to on-board participants including banks, merchants, electronic money institutions (EMIs) etc through application programming interfaces (APIs), it noted.

In the wake of COVID-19 global pandemic which has posed serious economic and social challenges for regulators, policy makers and services providers, etc., the digital transformation has become vital, not only for payments and financial services but also for every sector of the economy catering to financial needs of the customers.

The SBP, being the regulator of payments and financial industry, has played a great role to promote and develop payment and digital financial services in the country. The SBP’s report revealed that the payments industry in Pakistan continued to show a healthy growth, both in terms of volume and value of transactions conducted during FY2020. In recent years, banking through digital channels has been gaining popularity in the country and the number of transactions through digital means has seen considerable growth in the last fiscal year.

These channels offer alternatives resulting in faster delivery of financial services to a wide range of customers. It is evident from the fact that in the last 5 years significant progress has been observed in the usage of internet banking and mobile banking channels showing annualised transactions growth of 31 percent and 88 percent respectively.

Further, growth was observed in the number of inter-bank fund transfer transactions too, especially after the start of lockdown period imposed due to COVID-19 pandemic, wherein the SBP after consultation with market participants, waived all charges on fund transfer transactions conducted through online channels. Before the regulatory intervention, the number of interbank fund transfers was recorded at a daily average of approximately 188,000, whereas, after the intervention, the number rose to more than double on a daily average basis, according to the SBP’s report.

In addition, the adequate increase has been witnessed in digital access points and infrastructure, whereby number of ATMs showed continuous growth, with a year-on-year growth of 6 percent. The number of point of sale machines, which remained stagnant during the last few years, is expected to improve due to the regulatory intervention made by the SBP. Number of debit cards increased substantially, mainly due to the mandate given by the SBP for issuing Europay Master Visa (EMV) Chip and PIN Compliant cards, thus adding more security without compromising customer experience. The number of debit cards at the end of FY2020 has been 26.7 million, up 7.5 percent year-on-year.