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Wednesday, July 17, 2024

Raast- Pakistan’s instant digital payment system

Raast being a part of PM’s Khan’s Digital Pakistan Vision is the country’s first government-run instant digital payment system which enables secure, fast and transparent financial transactions amongst individuals, businesses and government entities.

Launched on January 11, Raast in another step by the current government towards the digitization of Pakistan. This digital payment initiative by Prime Minister Imran Khan is aimed at including poor segments of the society in the formal economy. It will enable end to end financial transactions among businesses, individuals and government entities.

However, a huge number of people were left confused at the inauguration of Raast as they had trouble trying to wrap their heads around this novel digital payment system. Therefore, Khurram Zafar, the current director of Karandaaz, tried to explain 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.

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

“Banks and mobile wallets motivate people to open accounts so that respective service providers can facilitate their customers in conducting transactions through digital applications or internet portals,” he said. “On the other hand, no mobile application will be launched for Raast and instead, banking applications and portals will offer payment through the Raast mechanism, he further shared. All banks will be taken on board for offering payments through the Raast mode, he added. 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.

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.

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

Karandaaz Chief Digital Officer Rehan Akhtar clarified that Raast is neither a bank nor a wallet, rather it is like 1link which plans to take all banks of the country on board to offer the consumers an efficient digital payment experience. He said that no mobile applications would be launched for Raast and instead banking applications would offer payments through the Raast mechanism. Raast aims to make inter-operability a seamless experience for the consumers. To simplify the payment addresses and make funds transfer quicker, a directory is going to be created in the Raast system.  Another major incentive is going to be the low or no fee at all on the intra-bank funds transfer.

He explained that there would be three use cases for the payment system. In the first case, the government would be able to pay stock dividends, payments and government salaries through Raast under the Ehsaas Program. In the second case, person-to-person use of the system would allow financial transaction between two individual accounts. However, this mechanism has not yet been activated. Lastly, Raast plans to launch a scheme similar to Visa for merchants so that they receive their money on the same day and their cash flow isn’t affected.

The Prime Minister, while addressing the inauguration ceremony of Raast had said that this initiative would help include the low-income groups and make them part of the mainstream economy. He was optimistic that it would go a long way in fighting poverty, particularly in the rural areas.

The faster payment system will be used not only to settle small-value retail payments in real-time but also to provide cheap and universal access to all players in the financial industry, including banks and fin-techs.