Andrew Torre is Regional President for Central and Eastern Europe, the Middle East and Africa (CEMEA) at Visa Inc. He oversees Visa operations in more than 90 countries and territories across the region, cultivating relationships with clients and government authorities. He has been with Visa since 2002, where he held global roles across product, strategy and pricing, and had also served as General Manager for Russia and Sub-Saharan Africa respectively.

Prior to joining Visa, Torre served as General Manager of the Enterprise Payments Division at Bank Serv. Previously, he was Vice President of New Product Development and Strategic Planning at Washington Mutual and worked for the World Bank in Kiev, Moscow and CIS territories.

On his recent visit to Pakistan, Torre spoke to Business Recorder, where he discussed Visa’s expansion amid the country’s accelerating digital transformation and the company’s mission in driving greater financial inclusion.

BR Research: Visa’s biggest competition in Pakistan is cash. While the Pakistani government has been working with financial institutions on issuing regulations to promote financial inclusion and drive digitalization, cash still reigns supreme. Covid-19 may have highlighted the benefits of going cashless, but consumers still lack awareness over the benefits of digital payments versus perceived risks.

How do you see the developments taking place in Pakistan to drive financial inclusion?

AT: Pakistan remains largely a cash-based society for numerous reasons, including the prevalence of a shadow economy, tax avoidance and the high cost of digital transactions. However, this is not unique to Pakistan, as we have seen many other markets face similar challenges.

The use of cash certainly remains prevalent among consumers in Pakistan, but the sector has evolved tremendously. Regulatory and supervisory mechanisms that drive financial inclusion are in place, which yields a positive outlook for the country, and we can see potential for growth in the country.

The financial ecosystem in Pakistan is working towards building financial empowerment by accelerating digital payments. The State Bank of Pakistan’s data indicates a decline in cash usage, with e-banking transactions in FY22 amounting to close to Rs138 trillion in value. This was up 59 percent from the previous year anda36 percent increase compared to FY21. These are encouraging trends. Based on my discussions with the Governor of the State Bank of Pakistan, there is a clear focus on financial inclusion driven by initiatives such as RAAST – Pakistan’s first instant digital payment system.

Fintechs are also playing a key role. They equip banking institutions with tools to improve financial transactions and procedures. In a country where the smartphone segment is projected to grow by 2.28 percent between 2023-20271, there is huge potential for digital payments and these act as a multiplier of GDP growth.

BRR: Visa is a world leader in digital payments, central to the developments which have been taking place in the sector. What products and solutions is Visa offering globally and in Pakistan to help the payments ecosystem thrive?

AT: Visa has been in Pakistan for nearly three decades where we work directly with consumers, merchants, and financial institutions. At a core level, we work with financial institutions to offer different types of debits, credit and prepaid card options. Our global network helps facilitate fast, secure digital payments worldwide, enabling businesses and consumers to send money directly to a bank account or card, including domestic and cross-border payouts and payments.

We also simplify person-to-person (P2P) transactions, payments to small businesses, and corporate, worker, insurance, and government payouts. Visa offers push funds operations, where instead of having the merchant submit the transaction and the issuer approving (or denying), the opposite occurs. Users can move money in a Peron to Person (P2P) transaction within the Visa Direct network, which is available in Pakistan for cross-border transactions. An example in this case would be remitters sending funds home. To further illustrate what I mean by P2P transactions, we are working with Careem in other regions, to enable the ride-hailing app to move the money directly to captains, in real-time. With 4.1 billion Visa cards in use globally, Visa is connecting people through payments all around the world.

Merchants are ultimately focused on increasing sales, while consumers value convenience and so there is a need for more safe, secure and accessible payment solutions in the market. Visa has a wide range of value-added services that we offer on the consumer side as well as the merchant banking side that support this need. For example, Visa Advanced Authorization (VAA) is a comprehensive risk management tool that monitors transaction authorization on our global network in real time. Every single transaction is evaluated, helping issuers respond promptly to instances of fraud, while approving legitimate transactions, and identifying emerging fraud trends and patterns on the long run.

To further prevent fraud, we have also launched Visa Risk Manager (VRM), a web portal with risk management tools that can be accessed 24/7. Tokenization, another security solution that enables frictionless digital commerce, replaces a cardholder’s 16-digit Visa account number with a secure token that protects the underlying card number from fraudsters.

On the merchant side, we have two solutions. First, the cyber source platform where we work with merchants and acquirers to accept e-payments securely, which is really important for small businesses seeking scalable, robust solutions. The platform is very similar to the services we are offering on the consumer side, where rules are created so risks can be minimized when they accept payments.

We have also equipped SMEs with digital payments solutions and access to financial services and also partner with fintechs to create new and innovative payment products and services. One of the key solutions that we will soon see in Pakistan, is ‘Tap to Phone’. This solution makes it easier for sellers to use the smartphones they already own to accept payments—just by downloading an app. This solution provides a low-cost answer to digital payment adoption, especially for smaller businesses.

BRR: The fintech ecosystem is expanding in Pakistan and plenty of opportunities exist within the sector. How are you partnering with fintechs in Pakistan and beyond to develop new, innovative payment solutions?

AT: Visa has been a key partner for fintechs, bringing sophisticated technologies, security, and reliability to fintechs at every stage of the lifecycle. Over the last few years, we have forged new partnerships with fintechs to provide access to convenient and secure digital payments to underserved/underbanked segments of the Pakistani population. Our Visa Everywhere Initiative (VEI) and Fintech Fast Track Program were created to empower more fintechs to showcase their ground-breaking solutions, which can help solve the payment challenges of the future. In the VEI program, we invite participants from all over the world to propose ideas for new payments solutions. As part of the competitions, which starts on a regional scale, Visa experts help participants with business models and technology, also connecting them with financial institutions.

These startups are typically at the very initial stage of development, and we have seen many successful examples from Pakistan.

The Visa Fintech Fast Track program which provides rapid onboarding and reduced fees to help early-stage start-ups gain access to the capabilities that lie within Visa’s global network. Visa’s Fintech Partner Connect program targets more established fintechs, connecting them with financial institutions to collaborate on innovative solutions, helping them grow and scale their businesses. For Pakistani fintechs, launching a product in a market as vast and diverse can provide valuable experience, enabling them to expand into other markets where there is demand.

BRR: The cost of digital transactions such as funds transfers or merchant payments is high in Pakistan, in addition to taxes. However, there is no cost to cash transactions. How can the ecosystem come together to accelerate digital payment adoption?

Digital payments adoption requires the right balance. Firstly, the merchant must be willing to accept digital payments and understand that there is a cost to handling cash. These can include fees and potential theft concerns, time and energy spent with the bank when depositing funds and much more. Secondly, by seeing the merchant’s cash flow through digital payments, financial institutions can assess the seller’s creditworthiness, which enables them to offer lending and credit solutions.

Financial institutions and digital payment providers must work together to encourage merchants to go cashless, offering the right solutions such as the low-cost acceptance solution I mentioned to help them cover costs, scale their operations and succeed. I believe that cost alone, however, is not enough to drive large-scale digital payment adoption, but it is rather a combination of factors including the right technology, creating a positive customer experience, security and overall ease and convenience.

What we must also realise is that a significant shift in consumer behaviour towards digital commerce, mobile and internet banking over the last couple of years accelerated by the COVID-19 pandemic. According to our 2022 Stay Secure consumer survey2, the majority of the consumers in Pakistan (85%) said they would switch stores or online shopping sites and apps, based on the payment methods offered, with most consumers indicating a strong preference for digital payments over cash. 3 out of 4 Pakistani consumers surveyed made a digital payment in the last month, and nearly half of respondents are using more digital payments in stores - especially contactless - and online since the onset of Covid-19. The Visa ‘2021 Small Business Recovery’ study also revealed that nearly 8 in 10 small businesses in Pakistan see digital payments as necessary for business recovery. More than 50 percent merchants at the time were planning to offer contactless payment options to meet customers need.

This is why all Visa is doing with our network of partners to meet that rising demand is so important right now. I mentioned working with the government to ensure the right policies are in place. In Pakistan we have collaborated with a cloud-native technology provider for Government of Pakistan, in a strategic step towards driving digital transformation across the government sector in support of Pakistan’s cashless future agenda. All of these efforts by the collective network will help in the effort to digitize Pakistan’s economy and drive access to digital payments to various communities.

1. https://fr.statista.com/outlook /cmo/consumer-electronics/telephony/smartphones/pakistan

2. https://pk.visamiddleeast.com/ about-visa/newsroom/press-releases/prl-14082022.html