Syed Ahmed Ammar Bukhari
The Financial Inclusion is the buzzword around the globe and digital payment is an integral part of it. Similar is the case in Pakistan, the concept of “digital payments” has evolved over period especially during this pandemic.
The large number of consumers has shifted themselves from in store shopping towards e-commerce purchases. Earlier the economy of Pakistan was dominated by cash transactions. Majorly this mode of payment was considered safe by buyers and sellers both; in fact most of the wages and salaries were paid in cash as well.
However, Covid-19 wave has made most of the people to switch to online payment methods due to movement restrictions and lockdowns following the outbreak. Consumer trust has been developed on the usage of digital platforms for the payment; they have realized that it is more convenient and secure mode of payment.
According to State Bank of Pakistan’s Annual Report, the revenue of E-commerce business increased from Rs 2.3 Billion to Rs 9.4 Billion in Q4 of FY20 and it also highlighted the strong growth of 88 percent in digital and online payments in current year.
There was a survey conducted by Visa and the result showed that 55 percent of online shoppers expressed their satisfaction and willingness in continuing their purchases online, and 49 percent said they will continue paying for purchases via card. For in-store purchases, 56% of consumers said that they will prefer QR code payments with their mobile phones over any other transactional medium as they found this digital channel more convenient and safe.
McKinsey Global Institute issued a report titled “How digital finance could boost growth in emerging economies”, which states that Pakistan’s digital finance market has a potential of growing up to $36 billion by 2025, that will help in boosting the country’s gross domestic product (GDP) by 7 percent, resulting in $263 billion in terms of new deposits and creating a job opportunities for more than 4 million people in the coming years.
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It has been observed that various market players are contributing towards Digital Payments and continuously performing constructive efforts in creating awareness amongst the people of Pakistan.
The products like Easypaisa, UPaisa and Jazzcash are mobile phone based accounts which are offering quick and easy payment services across the country. Together, they have developed an infrastructure and enhanced the outreach of a mobile network operators and the financial expertise of a bank to reach millions of customers who are based both in urban and rural areas of the country.
Not only private institutions are working on promoting digital payment services but the Government is also seen taking the steps keenly in implementing the strategic agenda of digitalization and increasing financial inclusion in the country.
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The initiative like RAAST (instant payment system) which was developed with the collaboration of SBP, Karandaaz and Bill & Melinda Gates Foundation depicts Government’s vision and commitment to promote and encourage digitalization of the economy of Pakistan.
This new digital payment system can swiftly transfer money from one entity to another and it is the only system till date which was endorsed by Pakistani government itself, linking financial institutions and government entities. The main objectives behind the launch of RAAST are to make transparent & corruption free transactions between two entities, increase profitability for government and create a platform where the unbanked population of Pakistan can be brought into the financial net.
The only thing that restricts the overall population for trusting digital payment as a primary medium is their lack of knowledge. This issue can be resolved with effective marketing strategies. There is immense opportunity to digitalize economy which will eventually help uplifting millions of Pakistanis economically and socially.
The writer is associated with Szabist Islamabad.
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