In a first Pakistan unveils new strategy to attract $263 billion, which would raise GDP to 7% and create 4 million new jobs
ISLAMABAD - In a first Pakistan unveils new strategy to attract $263 billion, which would raise GDP to 7% and create 4 million new jobs.
State Bank of Pakistan has rolled out the National Payments System Strategy aimed at boosting Pakistan’s GDP growth to 7% and creating 4 million jobs in the country thanks to customers migrating to electronic payment systems.
Governor State Bank of Pakistan (SBP) Dr. Reza Baqir launched the National Payment Systems Strategy (NPSS) in an event at its headquarters in Karachi.
President of the World Bank, David Robert Malpass was the chief guest at the event that was attended by key stakeholders including regulators, government entities, banks, telcos, Electronic Money Institutions (EMIs), Payment System Operators (PSOs) and Payment Service Providers (PSPs) and other Fintechs.
The governor highlighted the benefits of the National Payments System saying,
This strategy lays out a road map and action plan for Pakistan to have a modern and robust digital payments network.
The strategy claims to attract $263 billion in new deposits with a potential market of $36 billion by 2025.
The objectives of the National Payments System Strategy are to make recommendations to design a National Payments System complying with international standards and best practices, tailored for specific circumstances and providing a safe, efficient and inclusive payment system in Pakistan. Migration to efficient electronic payments stimulates consumption and trade, benefiting the economy.
The strategy for Pakistan’s National Payment System is based on applicable international standards, particularly the CPMI-IOSCO PFMIs, as well as the analytical framework defined by the CPMI-World Bank for Payment Aspects of Financial Inclusions (PAFI).
It addresses a wide range of topics covering the entire National Payments System: the critical foundations, including the Legal and Regulatory Framework and the NPS Infrastructure. The strategy then continues with the characteristics of Pakistan’s Retail Payments Market, the issues of account and payment product design, and access points.
Oversight of the National Payment System is specifically identified as a key area of focus and a pivotal responsibility of the Central Bank. Finally, large-volume recurrent payment streams are identified and recommendations on how to leverage them are provided, starting with government payments and ending with national and international remittances.
The existing impediments revolve around the lack of the infrastructure needed to keep up with the widespread use of electronic payments, particularly for large volume payments (e.g. government payments). Specifically, by expanding the market and the legal/regulatory environment, approximately 69.3 million adults can be provided with transaction accounts, while an additional 9.2 million adults can obtain access to transaction accounts through the implementation of a financial inclusion strategy in Pakistan.
By digitizing G2P cash transfers, as much as 3.4 million adults can become recipients of electronic payments. On the demand side, there is a huge discrepancy between the fast pace at which financial inclusion has been progressing in other similar countries and the slower pace at which it has been progressing in Pakistan.
The effective protection of customers and the existence of a competitive environment are also being considered as important objectives by many central banks. Central banks typically seek efficiency and safety in the National Payments System (NPS), including retail payment systems, services, and payment instruments.