An analysis of the presentations made at the 21st meeting of 16-member Asia Pacific Council for Trade Facilitation and Electronic Business by senior bankers offers one of a valuable and interesting insight into how rapidly the electronic-banking is replacing the traditional paper-based banking.

For information, the paper presented by Director Payment Systems of the State Bank of Pakistan, Aftab Mustafa Khan, said that ATMs grew by 39 per cent during December 2000 to December 2003. And the number of on-line branches operating in the country registered a far healthier growth of 70 per cent jumping from 322 to 1,576 during the same 3-year period. There were some 446,000 credit cards and 1.106 million ATM/Debit cards in circulation as on September 30 last year.

Not only there are more ATMs, on-line branches, credit cards and ATM/Debit cards today but the transaction volume and amount of plastic money has also registered a strong growth. The monthly transaction volume of credit card use has gone up by 80 per cent from 0.28 million in 2000 to 0.50 million last year while the monthly amount of credit card use has registered a much higher growth of 128 per cent jumping from Rs 0.71 billion to Rs 1.62 billion during the same period.

The ATM use has registered a much stronger growth. The monthly transaction volume has increased by 62 per cent per annum during four years ended last December from just 0.3 million to 1.3 million while monthly amount registered a much higher growth of 77 per cent per annum from Rs 1 billion to Rs 5.8 billion during the same period.

That means that the substantial growth in credit use has helped create over Rs 19.44 billion worth of plastic money by September last year which is growing by each passing day. It also shows that the increased use of ATMs has also helped lessen the load off the banks to accommodate regular banking.

Despite the increased use of electronic-banking lead by credit card and ATM/Debit card the payment system in Pakistan still primary remains cash-based system to exert immense pressure on paper currency which costs sizeable amount to print. In June 2002, 375 billion worth of paper currency was in circulation which jumped to Rs 549 billion in October last year meaning that 174 billion worth of new paper currency was printed by the government between June 2001 to October 2003. It also shows that currency-in-circulation increased at an average annual rate of 20 per cent and the same would keep on happening until and unless the tradition systems of payment which rely heavily on banks, postal services and instruments as cash, cheques, pay orders, demand drafts, telegraphic and mail transfers are gradually, and increasingly, replaced by non-paper-based electronic instruments.

Replacing the paper-based payment system by an electronic-based one would not only help lessen the burden on the payment infrastructure but also offers great potential for investment in the banking sector in a market virgin as ours. According to paper "Road to e-payments" presented by the CEO of KASB Technology Services, Furqan Qureshi, the outward cash-dispensing infrastructure in Pakistan comprises some 28.27 billion bank accounts 21.99 million savings, 4.71 million current and 1.51 million micro-credit and agriculture credit. There are also some 4.90 million post office savings accounts.

In addition, there are nearly 15 million personal accounts the biggest 8.71 million of which have deposits of of Rs 10k-Rs 50k followed by 4.36 million of Rs 1k-10k; 0.81 million between Rs 50k-100k and 0.49 million of Rs 100k-200k. In addition the outward payment infrastructure is also responsible for payment of salaries and pension to 4.79 million government and military pensioners; over 3 million public sector employees and over 5 million private sector employees. Needless to say, this exerts immense pressure on the payment infrastructure causing inconvenience to people because it is time-consuming, error-bound and susceptible to disputes.

The inward payment infrastructure, according to Furqan Qureshi, is just as heavily burdened. Over 310 million utility bills are issues by public and private companies annually while another 109 million plus are issued by others both public and private. Some 156 million utility bills are issued by WAPDA alone each year followed by 54 million bills by PTCL, 30 million bills collectively by four mobile operators, 25 million by Sui Northern, 23 million by Sui Southern, 21 million by KESC and 3 million by Water and Sewerage. The inward payment infrastructure is further burdened by some 109 million 'others' transactions annually 15 million motor vehicle registrations, 8 million Radio licenses, 3 million TV licenses, 4 million Gun licences, 1 million Sales and Income Tax, 70 million Railway tickets, 5 million insurance premiums and 3 million university and professional colleges tuition fee.

The heavily burdened payment-infrastructure, outward as well as inward, not only highlights the importance of electronic and paper-less banking but also shows the great potential for investment in a market such as ours. However, much depends on the policy makers to attract investment in this particular sector for the benefit of the economy as well as the people, the added attraction of which would be the documentation of the economy.