PAYMENTS: FU

TURE IN

PAKISTAN

T H E AC T I O

N PL A N A

N D TH E R

O L E OF S

B P

By

Mansoor Ali SeelroMBA – IoBM

20153-18419

PAYMENTS: CURRENT STATUS & FUTURE Traditional payment methods are phasing out; more sophisticated,

secure and flexible payment methods are phasing in Multiple options to send / receive payments:

1. Debit / credit cards2. Bank transfers3. Branchless banking / mobile banking

PAYMENTS: CURRENT STATUS & FUTURE Other options:

Ewallets i) 2CheckOut viii) Stripe

ii) ACH Payments ix) WePay

iii) Apple Pay x) Authorize.Net

iv) Dwolla xi) Amazon Payments

v) PayPal xii) Google Wallet

vi) Payoneer xiii) Blockchain

vii) Keenu

PAYMENTS: CURRENT STATUS & FUTURE Amongst the modern payment methods being phased in include the

‘ewallets’ PayPal being the most popular ewallet that exists Ewallets have started dominating and will surely dominate in future

as flexible, convenient and secure payment methods The list contains two traditional payment methods i.e. debit / credit

cards and bank transfers The rest of the methods are modern and have gained much credence

PAYMENTS: CURRENT STATUS & FUTURE The most popular global payment method particularly in e-

commerce is through credit cards Bank transfers are another popular recurring pull-payment method Branchless banking has gained much credence in Pakistan Looking at the portfolio of this segment, following big players are

revealed: EasyPaisa Omni MobiCash Meezan U-Paisa

PAYMENTS: CURRENT STATUS & FUTURE A glimpse at some ewallets:

PayPal: PayPal is by far the most popular global ewallet today. PayPal has over 137 million active accounts in 193 markets and 26 currencies around the world, which makes it easy to transfer and request payments.

Google Wallet: Google Wallet is essentially Google’s version of PayPal, complete with money transfers and a Google Wallet Card! Since we’re all addicted to the Big G, it shouldn’t be all that difficult to spend and receive money.

PAYMENTS: CURRENT STATUS & FUTURE A glimpse at some ewallets (cont’d):

Amazon Payments: Amazon Payments is a safe, easy and convenient method for users to receive money by using Amazon’s API.

Bitcoin: Bitcoin is a form of electronic currency that can be used to pay for various goods and services. For payments, Blockchain has the potential to make them faster, cheaper and safer.

KEENU: Keenu for the first time in the country, introduced NFC payment acceptance. The service, again, will be the first in the country, to allow users to make digital payments directly from their bank accounts, hence eradicating the need to carry paper-money.

PAYMENTS: CURRENT STATUS & FUTURE Unfortunately not all ewallets operate and accept payments in

Pakistan! Given the huge potential in Pakistan’s economy recently because of

CPEC and the stable banking system in Pakistan, ewallets entry in Pakistan is sure-shot!

Some of the questions to come handy for Action Plan might be put this way:

What does the advent of all such methods reveal? How our lives are going to change? What our entire financial system will look like?

PAYMENTS: ACTION PLAN & THE ROLE OF SBP Big push to mobile transactions can become possible if government

gets in on the act How about paying school teachers through mobile accounts? What if all small payments made by government were steadily

migrated onto digital pathways? Paying traffic fines and road tolls with your mobile phone? This would open up an economic space of almost Rs 900 Billion,

thereby pulling enormous quantities of money out of the cash economy into digital payments

PAYMENTS: ACTION PLAN & THE ROLE OF SBP Since the payments are the easiest way to get people onto formal

financial services To achieve this network effect, a large acceptance infrastructure is

critical By some estimates, a merchant network of more than 500,000 will be

required to make mobile payments part of our economic mainstream This process can be accelerated if government were to migrate its

small payments onto mobile accounts In due course this could expand to include other payments made by

and to government

PAYMENTS: ACTION PLAN & THE ROLE OF SBP The field is limitless once it begins to open up, and can serve as a

significant catalyst to the wider acceptance of mobile payments in our economy

Framers of the budget can consider the following: First, the removal of the requirement of payments to be collected

only at a government-owned institution Second, an electronic prize bond and a micro T-bill can be created Third, all government salaries can be paid through a mobile

account Fourth, withholding tax on over-the-counter transactions can be

eliminated

PAYMENTS: ACTION PLAN & THE ROLE OF SBP The resultant boost given to the mobile banking industry would not

only help drive a game changing innovation in our economy, it would bring the benefits of modern financial services to the unbanked, and help drain the swamp of a vast cash economy that provides the oxygen for the undocumented sector

The issue at the moment is also to change the behavior of people and create an ecosystem based on trust, credibility, quality of service and customer confidence

All we need is one push to kick the ball rolling. The forthcoming budget could provide that push!

PAYMENTS: ACTION PLAN & THE ROLE OF SBP The State Bank of Pakistan (SBP) under NFIS (National Financial

Inclusion Strategy) has to set the target of opening mobile wallets, encourage and support ewallet companies to enter the Pakistani market

Mobile payments, digital payments and the like are a huge enabler of driving financial inclusion

With the advent of new technology & increased awareness levels around it, Pakistan is supremely positioned to capitalize on this front

It will take not more than a few years to fully observe widespread use of digital payments if optimal efforts are exerted

THANK YOU All money is a matter of belief –

Adam Smith