News Analysis |
In a fresh IT triumph, three online transaction firms FonePay, Monet and TPL Rupya are entering Pakistan’s financial market, said a quarterly report of the State Bank of Pakistan (SBP) and are set to grab their market share on the rapidly growing ecommerce sector of Pakistan, targeting an entry in the country’s IT sector.
The report overall hinted at a rise in business-to-consumer e-Commerce (e-B2C). Growing incomes, coupled with advancement in communication technology and expansion of Internet access and branchless banking, has been propelling the sector forward, said the SBP report. The new financial technology will enable people to make online transactions to anyone available on any mobile wallet account, which is not yet possible.
E-Commerce (online shopping) in Pakistan also started picking up with 571 merchants offering their products online. During FY17, 1.2 million transactions valued at Rs. 9.4 billion were processed through e-commerce.
This has proved a major problem for freelance remittance, which hit $70Million as of March last year. Freelance writers and craftsmen have had to rely upon foreign Paypal accounts and had often been victims to scams. Fintech will add about 4 million jobs, 93 million bank accounts, $36 billion annually to the gross national product (GNP), and $7 billion to Pakistan government’s net revenue by 2025, according to McKinsey & Company, a worldwide management consulting firm.
“Bank accounts seem to be on track as there are 7 million today. This includes 1.8 million traditional accounts, accumulated over 50 years, and 5.2 million mobile/branchless accounts accumulated in around one-tenth of that time,” said National Technology Fund Ignite CEO Yusuf Hussain.
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This is because globally, traditional bank accounts rise proportionately to GNP, but mobile accounts can rise exponentially. The central bank’s target of 50 million accounts by 2020 should be on track, as the McKinsey forecast said, he remarked. Transactions worth Rs. 20.7 billion were carried out by consumers on international e-commerce websites, said the SBP.
As the use of Internet and mobile banking goes up, the use of call centers/ IVR banking has shown a fall, with a negative growth of 63% in the last one year. “It has been observed that customers prefer mobile banking and Internet banking over call centers/ IVR.”
Pakistan is quickly moving towards adopting digital modes of payment with the number of electronic transactions registering a 17% year-on-year growth in 2016-17, stated the central bank in its annual performance review.
With the advent of mobile broadband technology, Pakistan has witnessed a surge in digital adoption with a number of ecommerce businesses as well as online methods of conducting payments deriving immense benefits. Internet and mobile banking emerged on the horizon while ATM machines remained king of the ring in an otherwise, cash-based society.
“Following the global trends, the payment systems landscape in Pakistan has also transformed rapidly during [the] last 6-7 years with stellar growth in payment cards, mobile, internet banking transactions,” the State Bank of Pakistan (SBP) said in the annual performance review.
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Banks, businesses and consumers in the country made a total of 625.8 million transactions via electronic banking channels worth Rs. 37.1 trillion in the fiscal year 2016-17. This number is 17% higher than 543.8 million transactions conducted in the prior year. However, the value of transactions remained flat.
Some 25 banks offered Internet and call centers/IVR banking services, while 18 banks dealt in mobile phone banking as on June 2017. On the contrary, paper-based transactions were recorded at 451.8 million valued at Rs. 139.6 trillion in the year.
Commercial banks, via their real-time online branches (RTOB), deposited and withdrew cash and transferred funds through intra-bank facility worth Rs. 31.1 trillion during the year via 143.6 million transactions during the year. “Rs. 31.1 trillion…was 23% of total e-banking transactions by volume and 84% by value,” the central bank said.
Internet banking increased 32% to 25.2 million transactions worth around Rs. 969 billion in fiscal year 2017. Mobile phone banking surged 12% to 7.4 million transaction valuing Rs. 141 billion in the year.
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“The initiation of projects like the development of National Payment Gateway, online collection of taxes and duties and elimination of cheques from government payments will have far reaching implications on banking system efficiency, effectiveness and access,” SPB said.
Pakistan is quickly moving towards adopting digital modes of payment with the number of electronic transactions registering a 17% year-on-year growth in 2016-17, stated the central bank in its annual performance review.
Some 25 banks offered Internet and call centers/IVR (interactive voice response) banking services, while 18 banks dealt in mobile phone banking as on June 2017. On the contrary, paper-based (cheques, pay orders, demand drafts and others) transactions were recorded at 451.8 million valued at Rs. 139.6 trillion in the year.
As the use of Internet and mobile banking goes up, the use of call centers/ IVR (interactive voice response) banking has shown a fall, with a negative growth of 63% in the last one year. “It has been observed that customers prefer mobile banking and Internet banking over call centers/ IVR.”
E-Commerce (online shopping) in Pakistan also started picking up with 571 merchants offering their products online. During FY17, 1.2 million transactions valued at Rs. 9.4 billion were processed through e-commerce.