Prime Minister Imran Khan has launched Raast, Pakistan’s first instant payment system, to make immediate digital payments between individuals, businesses and government agencies.
This advanced payment system will be used to calculate small value retail payments in real time, while providing cheap and universal access to all players in the financial sector, including banks and fin-technologies.
Speaking at the meeting, the Prime Minister described it as a major step taken by the State Bank of Pakistan towards Digital Pakistan and said it would help include low-income groups and make them part of the core economy. He was optimistic that this would go a long way in eradicating poverty, especially in rural areas.
Raast, Pakistan’s Faster Payment System, will be used not only to handle small value retail payments in real time, but also to provide cheap and universal access to all players in the financial sector, including banks and fintech.
Imran Khan said that the instant payment system will not only document the economy, but also create more taxes to help build the country. He lamented the fact that only two million people in a country of 220 million paid enough taxes to build hospitals, schools and other basic necessities for ordinary people. He said that only 3,000 taxpayers paid 70 percent of the tax.
According to him, Pakistan’s foreign remittances have been growing steadily over the past five months, helping to stabilize the Pakistani rupee. He said that after a 17-year hiatus, Pakistan had made a surplus on current account and reduced pressure on the Pakistani rupee and played a key role in strengthening the national economy.
Any pressure on the dollar is for the average person to buy imported fats, oils, legumes, and so on. It raises the price of such goods.
Dr. Reza Bakir said that the Central Bank has long promoted technological innovations in the banking and payment systems; but after the Prime Minister’s vision and support, he stepped up his efforts to accelerate the pace of digitalization in the country.
To modernize the country’s banking and payment systems, SBP has launched a number of initiatives, such as launching Fintechs and modernizing its payment infrastructure.
Touching upon the National Payments Strategy prepared with the help of the World Bank and announced in November 2019, Governor Bakir said that Raast was the first big step taken to implement the strategy.
He noted that SBP has launched the Raast project with the support of the Bill and Melinda Gates Foundation and Pakistan Karandaaz, after a thorough review of key facts about current payment habits and in line with best international practices and standards. The most modern, faster payment system will provide cheap and universal access to the people of Pakistan, especially those who are financially isolated and less privileged, such as women.
Dr. Bagir said at the meeting that a faster payment system would stimulate economic growth, especially by facilitating small businesses and individuals. He shared SBP’s plan to phase out the system, starting with a one-time payment module that would include the digitization of dividend payments, salaries, pensions and other payments to government agencies.
Pakistan had low e-transactions for a number of reasons, including low access to banking, lack of trust and awareness of digital payment methods, limited interaction, difficult accessibility and high transaction costs.
Pakistan’s Real-Time General Settlement System (RTGS) only provides instant payment settlements for large value and corporate transactions. Raast will facilitate more efficient retail payment transactions.
Digital payments today account for only 0.2 percent of Pakistan’s nearly 100 billion transactions, while the share of digital transactions in peer countries ranges from 1.5 percent to 7 percent. This may be due to difficulties in the payment ecosystem.
Features of Raast
Raast will provide instant payment services to facilitate real-time digital payments between individuals, merchants, businesses and government agencies.
It will require low or zero operating costs for end users. Designed to work on a cost recovery model, Raast digital payments will be affordable for end users of all socioeconomic backgrounds.
Raast will interact on an industrial scale. It will allow all financial institutions to connect to the central infrastructure without a single connection, making digital payments accessible to customers of any financial institution through any channel.
It will offer innovative customer-oriented products and services. Raast offers innovative and user-friendly digital payment products and services to financial institutions (e.g.
Raast will provide reliability and enhanced security. It will offer secure payment types, ensure that every transaction is authorized by the payer, and offer advanced data protection and fraud detection services.
DFSs are being expanded by Financial Institutions, including:
In total, there are 44 banks with a network of 16,121 branches. These agencies have the authority to provide a full range of financial services to Pakistanis.
PSO / PSP
Payment System Operator / Payment Services Provider (PSO & PSP) 2014 These licensed entities are licensed to provide the following services to Pakistanis.
Electronic platform for clearing, processing, directing and exchanging electronic transactions.
Banks, FIs and other PSOs and PSPs may enter into contracts with merchants, e-commerce service providers and any other company to provide services to PSOs and PSPs in accordance with these rules.
Electronic Money Institutions (EMI) offers innovative, user-friendly and affordable low-cost digital payment instruments such as wallets, prepaid cards and contactless payment instruments. Electronic money has played an important role in digitizing different types of payments in different countries.
EMIs in Pakistan will provide end users with interactive and secure digital payment products and services.
According to the rules, potential EMI applicants are issued an EMI license in three stages: Approval in principle, Pilot Initiation Confirmation and Final Approval, ie License.
Government agencies play an important role in spreading digital financial services to Pakistanis. RaastPay allows Dividend Payments, Salary Payments and other Government-to-Person (G2P) transfers.
Payment infrastructure in Pakistan
The Raast project is an ongoing partnership between Karandaaz and the State Bank of Pakistan (SBP). The project aims to further develop digital financial services, reduce dependence on cash and improve the payment infrastructure to promote financial inclusion in Pakistan. It will become an important component of Pakistan’s payment infrastructure, allowing individuals, businesses and government agencies to make any payment digitally simple, fast, cost-effective and secure.
Along with Raast, Pakistan has various payment systems under the control of the State Bank of Pakistan, including Large Value Payment Systems (LVPS), Pakistan Real-Time Interbank Settlement Mechanism (PRISM) and Retail Payment with a specific area of work. systems.
In the next stages, Raast will digitize the payments of micro and small business owners or merchants who can make timely payments to suppliers and fulfill other urgent payment obligations. Similarly, the system will provide trouble-free Personal-to-Person payments with functions such as sending payment requests and initiating payments using identifiers such as phone numbers or any other nickname.