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The positive aspect of economy

The positive aspect of economy

The latest trends in digital payments is perhaps one of the brightest spots in Pakistan among the gloom and doom of inflation and fiscal deficit. This is one area where we have seen high double to even triple digit growth over the last few years as evidenced by State Bank’s Payment Systems Review Report. In FY23, 10.4% of total throughput and 42.2% of transactions in the country were digitized. For context, the corresponding proportions stood at 1.5% and 11.5%, respectively back in June 2019. In order to understand the ecosystem better, we will have to see what channels of payments exist in Pakistan.

First is the paper-based instruments such as over-the-counter cash deposits or demand drafts. Then we have PRISM, a high-value real-time gross settlement system, to which only 59 entities in the country have access. This is what banks use to send proceeds among themselves or how money flows into government securities. Finally comes “e-banking”, which comprises of:

  1. Real-time online branches (RTOB) — that facilitate transactions between branches
  2. ATM
  3. Internet banking
  4. Mobile Banking
  5. Call Center/IVR
  6. Point of Sale
  7. E-commerce

As a primarily retail channel, e-banking is what really matters but not all of it are truly digital payments. RTOB and ATM are largely cash-based so in this article we will analyse the number trends in POS, e-commerce, internet, and mobile banking.

Mobile Banking

Mobile banking continued upwards trajectory as throughput doubled to PKR 23.8 trillion in FY23, from PKR 11.9 trillion. Meanwhile, the number of transactions surged by 70% to reach 660.6M, compared to 387.5M. This makes it the fastest growing channel by some distance. That reflects in quarterly data as well where mobile banking value jumped 102% YoY and 9.5% QoQ to reach PKR 7.4 trillion by June. Similarly, volume soared by 73.3% YoY and 8.9% QoQ to 195.7M.

In other words, mobile banking now accounted for 29.6% of all retail payments (excluding PRISM and branchless banking) by volume and 6.8% by value during Q4-FY23. In the same period last year, the corresponding percentages were 21.1% and 3.8%. Steep increase in throughput also pushed up the average transaction size to PKR 37,946 in the outgoing quarter and PKR 35,964 for the entire FY23.

Internet Banking

The extraordinary performance of mobile banking sometimes overshadows internet banking, which has consistently posted high double-digit growth rates for a while now. In FY23, internet banking throughput rose 59.3% while volumes increased by 21.2% to reach PKR 16.3 trillion and 171.8M, respectively.


This is one important channel where the brightness of digital payments gets dim again. While e-commerce throughput jumped 34% to PKR 142 billion in FY23, volume plunged by 30.1% to 31.8M. Although increase in volumes is partly because of the inflationary pressures which are still lower considering nascent ecosystem of Pakistan however, Electronic Money Institutions (EMIs) at least partially compensated for it, processing 11.2M transactions worth PKR 17.3 billion.

On a quarterly basis, volumes recovered 28.1% QoQ amid a low base while still down 18.8% YoY. However, the growth continued unabated on the supply side as e-commerce merchants registered with banks reached 6,889 and another 4,956 through EMIs.

Point of Sale

Point of sale ecosystem further picked up momentum as throughput crossed the one trillion rupee mark in FY23, higher by 50.4%. Similarly, volume reached 199.3M, representing an increase of 44.8% — second only to mobile banking. In Q4-FY23 alone, POS value breached PKR 300 billion across 56.6M transactions.

The growth is partly the result of regulatory changes SBP implemented back in 2020, which improved the incentive structure for acquirers. As a result, new entrants like Paymob and Meezan entered the market. This helped the number of terminals reach 115,288 by June, compared to 104,865 the year before.

Raast and EMI: the next frontiers of digital payments

Over the last few years, we have seen a lot about how Raast or the countless digital wallets will reshape the future of payments in Pakistan. Though for the most part, those were just claims as the industry was too nascent. But now, we have some data available which gives us an early picture.

For the commercially live entities, FY23 exhibited a little mixed trend. Amid the economic environment, the two leading players had to start resource optimization sooner than they probably otherwise would have. Sadapay introduced fees for card issuance while Nayapay passed on charges for failed transactions to the customers.

But that didn’t stop the growth as throughput crossed PKR 222.1 billion during the year across 81.5M transactions, from PKR 10 billion and 5.3M, respectively. Given the low base, it’s not too useful to look at the percentages as yet. Moreover, the SBP revised the regulatory regime towards the end of the year, addressing some of the challenges with the business model of EMIs.

The SBP also launched Raast’s request-to-pay module in September, which is meant to facilitate seamless merchant payments in Pakistan. Meanwhile, in the existing use cases, most growth came from P2P with a throughput of PKR 1.4 trillion across 80.2M transactions in Q4-FY23. At least a part of this number was because of SBP’s force-routing. Ironically, bulk payments weren’t exactly bulky with a value of PKR 31.3B and volume only 70.9M.

Mobile apps ecosystem

Apart from the above, if one looks at the mobile apps ecosystem, Pakistan is the forerunner in MENAP region with 3.52 billion downloads in 2022 (as compared to 1.76 billion downloads of Saudi Arabia), putting it firmly in ninth position globally. Similarly, Pakistan also retained sixth position globally in terms of time spent for the third year straight. With 161 billion hours in 2022, Pakistan outpaced both Egypt (82.4 billion) and Saudi Arabia (27.42 billion) however its consumer spending of $82.9M is nowhere close to $1.12 billion of Saudi Arabia. This makes KSA rank on 13th position globally which is mainly due to its sizable population and high disposable incomes. Although the top three companies with most downloads are META, Google and ByteDance in the MENAP region, the top categories in different sectors are as follows:

Finance : Mobile banking and digital wallets
Shopping : BNPL, AliBaba
Food & Drinks : KFC
Sports : Live Cricket HD
Social apps : TikTok, Yalla

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