Here is everything you need to know about the Raast digital instant payment system

Raast is Pakistan’s first instant digital payment system, which will include poor segments of the society in the formal economy and will enable secure, fast, efficient, and transparent financial transactions.

Raast instant payment system

Khurram Zafar, the current director of Karandaaz, has explained the Raast instant payment system by the State Bank of Pakistan (SBP), in a simple fashion so that people confused about its mechanisms can better understand it. He eloquently explained the entire system, covering all components of the newly launched initiative, through a Twitter thread from his official Twitter handle.

Raast is Pakistan’s first instant digital payment system, which will include poor segments of the society in the formal economy and will enable secure, fast, efficient, and transparent financial transactions.  It will enable end-to-end digital payments among individuals, businesses, and government entities instantaneously.

Mr. Zafar begins by clearing out a common misconception that contrary to what people think, Raast is not the same as the current online transfer systems, it is in fact, very different and he further explains how.

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Raast is not an online application nor is it a consumer product. It is the “backend infrastructure” connected to banks, fintech et cetera, and service providers would be able to build a business service on top of it. With the help of Raast, the State Bank of Pakistan in association with Karandaaz has developed services called “use cases”, which help connect government departments with individuals it needs to make payments to.

“Bulk CDC payments of dividends to shareholders is the first. Bulk BISP payments to women will follow and then more use cases will be built by the private sector to enable P2P payments, Business to Consumer payments, and Consumer to Business payments. That capability built into Raast will enable what was previously not possible,” Mr. Zafar stated.

He then went on to explain the features of Raast. First and foremost, it will enable users to attach context with the transaction based on ISO 20022 standard (Single standardization approach) for cross-bank account payments, which will make it easier for people to identify the purpose of the transaction, meaning, it will allow for “programmatic passing of contextual information enabling auto reconciliation.” Basically, now if you send an amount to a certain account, you will not have to call the account owner to inform them of the transaction, hence, no reconciliation issues.

“The contextual information can be anything service providers attach to the transaction and allowed for some amazing use cases and apps to be built upon it. It is the most powerful feature of Raast which up until now was only available if both sender/receiver accounts were with the same provider,” explained Mr. Zafar.

Raast, through its open Application Programming Interfaces (APIs), will enable designated service providers to access its infrastructure and messaging standard. The service providers can then use these to combine it with the Raast backbone and approach anyone included in the Raast system, including government departments, the Karandaaz director explained.

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It will also possess a universal directory service, in which account holders can add aliases to their accounts. “So instead of providing bank name and variable-length account numbers with chances of errors, you just create an alias like kz@ubl,” stated Mr. Zafar.

“The directory feature allows unsophisticated users to be able to send payments easily if service providers leverage the context and directory features right in their apps,” he added.

Mr. Zafar informed that Raast will not cost high fees to send payments to other people. Unlike current bank transfer mechanisms where you have to pay a huge amount in fees for interbank transfer, no matter how big or small the actual amount is. “Without SBP intervention, you would still be paying big fees when taking money out of the MCB atm when your account is with HBL. That ends with Raast!”

Moreover, with Raast, users will instantly receive payments, allowing “real-time settlement”, unlike the current systems that take do not allow instantaneous payments.

Furthermore, Raast will have representation from all stakeholders, as it is not controlled by the State Bank of Pakistan, Karandaaz, or Gates Foundation. Mr. Zafar maintained. Raast’s low fees paves way for innovation will allow for the creation of use cases over it, especially for those who cannot afford huge fees.

“Raast’s true power lies in enabling the same products and services to be developed without mandating the users of those services to have an account in the same bank or with the same mobile service provides. Think of Raast as the internet backbone equivalent of digital payments. It’s up to you now to build the Facebook, Amazon, Netflix, and Google equivalent of digital payments on top it!”, Mr. Khurram Zafar concluded.

Read more: Raast instant payment system: A step closer towards digital Pakistan


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