The State Bank of Pakistan (SBP) Friday issued 'National Payment Systems Strategy' to comply with international standards for a safe, efficient and inclusive payment system aiming to boost GDP by 7 percent.
According to SBP's National Payment Systems Strategy, Financial Market Infrastructures (FMIs) can play a critical role in fostering financial stability and hence contribute to a strong economy and central banks also typically seek efficiency and safety in the National Payment Systems (NPS), including retail payment systems, services and payment instruments. The objectives of National Payment Systems Strategy are to make recommendations to design a National Payments System complying with international standards and best practices, and tailored for the specific circumstances and needs for a safe, efficient and inclusive NPS in Pakistan, the SBP said.
"Migration to efficient electronic payments stimulates consumption and trade, bringing benefits to the whole economy. By migrating to electronic means, the strategy intends to boost Pakistan's GDP by 7 percent, creating 4 million jobs, resulting in $263 billion in new deposits, representing a potential market of $36 billion, all by 2025," it added.
Furthermore, the SBP said that financial market infrastructures that facilitate the clearing, settlement, and recording of monetary and other financial transactions can strengthen the markets they serve, play a critical role in fostering financial stability and hence contribute to a strong economy.
The dual objectives of enhancing financial stability to contribute to economic growth and of supporting financial inclusion are the overarching goals that guide the recommendations presented in this document.
The SBP said that the strategy for Pakistan's National Payment Systems 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).
The foundations commitment from stakeholders, the legal and regulatory framework, and financial and ICT infrastructures are the critical enablers for payment systems and the provision of payment services in general. Specifically, they are important for the access to and usage of transaction accounts.
Based on these, the catalytic pillars i.e. payment product design, the ease with which accounts can be used, financial literacy, and leveraging large-volume recurrent payment streams for financial inclusion purposes form the drivers for access and usage.
The strategy addresses a wide range of topics covering the entire National Payment Systems: 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 Systems 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, SBP said.
According to SBP, the financial digital ecosystem is severely underdeveloped, both on the issuance and acceptance side. It will be difficult for the move to electronic payments to reach a critical mass without leveraging large recurrent payment streams such as government payments. As of 2019, only 21.3 percent of all adults in Pakistan own a transaction account; of these only 7 percent are held by females.
From this base, Pakistan has been proactive by triggering a transformation process, specifically through the introduction of "Branchless Banking" and the willingness of the SBP to engage in developing a new National Payment Systems strategy. Even though positive changes have been noted, the pace of transformation has been slow, and Pakistan still trails other countries with similar macroeconomic profiles.
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. Moreover, by digitizing Government to Person (G2P) cash transfers, as much as 3.4 million adults can become recipients of electronic payments.
Comments
Comments are closed.