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Payment system review

The State Bank of Pakistan (SBP) incessantly adopted contractionary monetary policy and kept the interest rate at 13.25 percent while on the other side the government had reduced profit rates on the National Savings Schemes. Experts viewed that the falling profit rates on deposits and high borrowing costs benefited the banks in term of high spread. Savings were the backbone of investment as higher savings lead to higher investment and higher growth in an economy provided that the other macroeconomic variables are conducive and a developed financial system exists in the economy. There is a need of falling of policy rate, which is very high as against to regional economies like; India at 5.15 percent, China 4.35 percent, Sri Lanka 8 percent, Malaysia 3 percent, Thailand 1.25 percent, Indonesia 6.5 percent etc. It is also predicted that SBP has kept the interest rates high because of inflationary outlook while in Pakistan; the inflation is cost-push that cannot be controlled through contractionary monetary policy. The experts also recorded that SBP to decline the policy rate in order to raise the demand of private sector credit which will ultimately help in new industrialization and increase in economic growth rate. On the other hand SBP recorded that the Pakistan Real Time Interbank Settlement Mechanism (PRISM) currently is the only Large Value Payment System being operated in the country. PRISM enables the transfer and settlement of high value interbank funds and enhances the overall efficiency of the large value payment system. On retail payment side, there are various e-Banking channels like Real time online Branches (RTOBs), ATMs, POS, Internet Banking, Mobile Phone Banking, Call Centers/IVR Banking and e-commerce that facilitate retail value payments.

Statistics showed that in Pakistan the commercial banks are enlarging their infrastructure for supporting e-Payments because of SBP’s enabling strategies. There are 15,549 bank branches reported by the Banks/MFBs, out of which 114 are overseas branches as on quarter-end January-March, 2019.

Payment systems transactions – Summary (Volume in Million & Value in Billion-PKR)
Transaction Type Quarter-1 FY19 Quarter-2 FY19 Quarter-3 FY19p
Volume Value Volume Value Volume Value
PRISM System 0.6 97,400.3 0.7 98,322.2 0.6 107,099.9
E-Banking 202.0 12,344.2 217.0 14,723.6 217.7 14,810.1
RTOB 40.9 10,252.6 47.1 12,427.5 46.9 12,472.0
ATM 127.1 1,500.5 131.4 1,593.0 130.5 1,606.5
POS 16.6 78.7 18.2 89.8 18.3 90.0
Internet Banking 9.0 369.5 10.2 444.2 8.6 362.3
Mobile Phone Banking 7.2 135.0 8.5 159.9 11.9 271.3
Call Centers/ IVR Banking 0.1 2.2 0.1 2.4 0.1 2.3
E-Commerce 1.2 5.7 1.5 7.0 1.3 5.7
Paper-Based 114.1 35,770.5 120.7 36,539.0 117.2 35,421.2
Total 316.8 145,515.0 337.7 149,584.7 335.4 157,331.2

Official’s statistics also represented that the business has shown a slow trend in this quarterly period, as most of the bulk payments occur during December end period and June end period. In addition to Inter-participants funds transfer, PRISM also facilitates customers by customers’ transfers’ facility which has the largest share of 83.1 percent in the total volume of PRISM transactions whereas the government securities transfers’ facility has the largest share of 69.0 percent in value of transactions.Officials of SBP also recorded that all branches, except 27, are offering online banking services to their customers. There are 14,575 ATMs and 55,240 POS machines in Pakistan. Besides, banks are also offering Internet, Mobile and Call Center Banking facilities to their customers. PRISM has also 45 direct participants, which include commercial banks, microfinance banks, development finance institutions and CDC (Central Depository Company). During the period under review, PRISM processed 599 thousands transactions of value Rs.107.1 trillion. These transactions explained a quarterly fall of 10.3 percent, however explained a rise of 8.9 percent in terms of value.

 

The customers’ transfer transactions include 158.3 thousands transactions of value Rs.100.9 billion of home remittances delivered by PRISM system across beneficiaries accounts.

During the period under review, e-Banking channels i.e. RTOBs, ATM, POS, Mobile Phone, internet and call centers banking as well as e-Commerce altogether processed 217.7 million transactions of value Rs.14.8 trillion. In the total e-Banking transactions, RTOBs has the highest share i.e. 84.2 percent in value of transactions whereas, the highest share w.r.t. the volume i.e. 59.9 percent goes to transactions processed through ATMs. As on 31st March, 2019, the total number of payment cards issued in the country has reached to 42.2 million. In the total number of recorded cards, the number of debit cards is 23.9 million, proprietary ATM cards is 8.6 million, credit cards 1.6 million, Pre paid cards is 0.2 million and social welfare cards is 7.7 million (18.4percent). During the period under review, 148.9 million transactions of valuing Rs.1.68 trillion were processed by these cards, of which transactions processed by debit cards has the highest share of 82.1 percent in volume and 86.2 percent in value of transactions. It is also recorded that during the quarter under review, 117.2 million transactions of value Rs.35.4 trillion were processed by branch banking and paper-based instruments. These transactions explained a quarterly fall of 2.9 percent in volume of transactions and a fall of 3.1 percent in value of truncations as against to previous quarter.

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