SBP unveils strategy for digital payments – Newspaper

KARACHI: The governor of the State Bank of Pakistan, Reza Baqir, launched the National Payment Systems Strategy (NPSS) on Friday.

At a meeting, which included the president of the World Bank, David Robert Malpass, Baqir said that "this strategy establishes a road map and an action plan for Pakistan to have a modern and solid digital payment network."

He continued that the key objective of this strategy would be to facilitate access to financial services for people and help improve financial inclusion, particularly for women, along with more documentation of the economy.

The event was attended by key stakeholders, including regulators, government entities, banks, telecommunications companies, electronic money institutions, payment system operators / providers (PSO / PSP) and other fintechs.

Baqir announced the issuance of the rules for the digital incorporation of merchants, which will help increase contact points for digital payments in Pakistan. He also shared that SBP is developing a faster payment system that will simplify the request, receipt and delivery of payments in the country.

Meanwhile, Malpass, in his opening speech, acknowledged the latest advances made to unlock Pakistan's potential and qualified the development in a correct manner with respect to the stabilization of the country.

"By migrating to electronic media, the strategy is intended to increase Pakistan's GDP by seven percent, create four million jobs, resulting in $ 263 billion in new deposits, representing a potential market of $ 36 billion, all by 2025, "notes the recently published document.

He points out that the current digital infrastructure severely lacks both demand and supply, which will not be changed at a massive level unless large recurring flows such as government payments are used.

While the country has been on a journey of transformation thanks to innovations such as branchless banking, it is still lagging behind countries with similar economic dynamics. That the strategy attributes to the lack of infrastructure, such as an automated clearing house.

It highlights the role that government payments, such as those of a benefits program, can play in the expansion of the fingerprint given its magnitude. In addition, it was recognized that Pakistan Post had a high potential for modernization of payments.

There is also immense potential for other important areas of collections and distributions, such as taxes and non-taxes (fines and fees) or the Benazir Income Support Program and the Employee Old Age Benefits Association, respectively.

To enable all this, the plan recommends exploring the possibility of a shared government payments platform, at all agencies and levels, through which disbursements and collections can be made.

With respect to the legal framework, the document says that the current exclusive approach of SBP in card schemes, banks and regulated financial institutions regarding the issue of payments.

That mandate should be further extended to incorporate all payment systems, instruments and services, including electronic money.

The policy continues that SBP should classify all payment systems operating in the country as digital payment systems (DPS), with each payment system and instrument specifically designated.

This includes the Pakistan Post payment activities, as it provides national and international remittances and raises money on behalf of the billers, and taxes, fees and fines for the federal and provincial government.

Posted on Dawn, November 2, 2019