APSR for FY23 released: Banks, MFBs process e-banking transactions worth Rs167.4trn

KARACHI: Banks and MFBs have processed 2,073.3 million e-banking transactions amounting to Rs. 167.4 trillion in value during FY23, marking an annual YoY growth of 28.6 percent by volume and 21.4 percent by value.

According to the Annual Payment Systems Review for the fiscal year 2022-23 (FY23), released on Wednesday by the State Bank of Pakistan (SBP), digital transactions continued their growth trajectory owing to the increased consumers’ preference for digital channels of mobile and internet banking for meeting their financial needs. Overall, mobile and internet banking transactions witnessed an annual growth of 57 percent by volume and 81 percent by value.

During the financial year 2023, e-banking transactions contributed to 85 percent of total payments processed by banks and MFBs, while the remaining 15 percent were paper-based transactions. This percentage was 80 percent for e-banking and 20 percent for paper-based transactions in FY22 indicating customers are gradually adopting digital channels.

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This trend can also be a causative effect of post COVID era, as many customers adjusted themselves to use digital channels to fulfil their day-to-day financials needs.

RTOB transactions had the largest share of 68 percent in e-banking transactions by value followed by combined 24 percent share of Internet and Mobile Phone Banking. However, by number of transactions, Internet and Mobile Phone Banking had the highest share of 40 percent in e-banking transactions while ATM based transactions share of 39 percent stood at second place.

Further, e-Banking transactions through Banks and Microfinance Banks (MFBs) grew by 29percent while value increased by 21 percent during the year. Similar growth pattern was also observed in Branchless Banking (BBs) transactions with number of transactions increasing by 28percent and value by 45percent during FY23.

Payment cards witnessed a growth of 24 percent, as compared to last year, reaching 58.1 million cards in circulation by the end of FY23. Similarly, Internet banking users increased by 15.1 percent to 9.6 million, while mobile phone banking users rose by 30.2 percent, reaching to 16.1 million in FY23. Additionally, Branchless Banking mobile app users saw significant growth of 42 percent reaching 57.8 million as of FY23 as compared to 40.8 million in FY22.

Number of e-banking users also increased significantly. The year saw an increase of 15percent in internet banking users, 30percent in mobile banking users and 42percent in BB mobile app users. Electronic Money Institutions (EMIs) also contributed meaningfully to the inclusion of digital banking users by opening more than 2 million e-wallets since their inception.

The e-banking is attracting more customers due to its efficient and instant payment solutions, and its transactions are growing at a steady pace over the years. In contrast, paper-based transactions have declined by more than 4percent during FY23 and cumulatively around 20percent in last five years. However, value of paper-based transactions increased by 20percent in FY23.

Real-Time Gross Settlement (RTGS) system of Pakistan and Raast - Pakistan’s Instant Payment System, owned and operated by SBP, facilitates financial institutions and banking customers in processing and settling the transactions. During the year, RTGS processed 4.9 million transactions amounting to Rs640.4 trillion, while 155 million transactions were processed on Raast amounting to Rs 3.2 trillion during this fiscal year.

Financial institutions are also strengthening their e-banking infrastructure by expanding Point-of-Sale (POS) terminals, Automated Teller Machines (ATMs), Cash/Cheque Deposit Machines (CDMs), e-commerce merchants and agents’ network to meet customers’ needs.

As of June 30, 2023, there were 115,288 POS terminals, 17,808 ATMs, 520 CDMs and 6,889 e-commerce merchants for providing payments services to the customers. During the fiscal year, number of transactions through POS (199.3 million) and ATMs (809.7 million) grew annually by 45 percent and 17 percent respectively. Domestic e-commerce transactions using payment cards were 31.8 million which amounted to Rs 142 billion during the year.

As of June 30, 2023, there were 58.1 million payment cards in circulation of which 44.5 million were issued by banks and MFBs, 10.8 million by branchless banks, and 2.8 million by EMIs. The SBP’s review presents growth and trends in banking transactions accompanied by the usage of payment systems’ infrastructure and instruments in the country.

Copyright Business Recorder, 2023