The country’s digital financial services (DFS) market is making good progress, despite the pandemic year’s tiredness. According to the State Bank of Pakistan’s (SBP) latest quarterly statistics on branchless banking (BB), the total number of mobile wallets had reached around 67 million by the end of March 2021, up 38 percent from the same time previous year.
More importantly, by the end of March 2021, the number of ‘active’ mobile wallet accounts had risen to about 43 million, representing a year-on-year increase of 54 percent. The growth rate of active wallets (active wallets are those that have been opened in the last 180 days or have made at least one transaction in the last 180 days) is much higher than that of total wallets, implying that users who had previously registered but then became inactive are returning to their wallets.
According to SBP data, the number of active m-wallets climbed by 15 million between March 2020 and March 2021, the time period defined by Covid-19’s lows and ultra-lows. That’s a substantial sum. In addition, the ratio of active m-wallets has improved throughout this time. In March 2020, 58 percent of m-wallets were considered active; by March 2021, that number had risen to 64 percent.
The annual increase in active m-wallets has had a significant influence on transactions. The volume of transactions surpassed 550 million in January-March 2021, up 53 percent from the same period the previous year. In terms of transaction value, Rs1.33 trillion was transferred into or through m-wallets for various types of transactions in 1QCY21, representing a 65 percent increase year on year.
Mobile top-ups, inter-wallet fund transfers, cash deposits in wallet, utility bill payment, and wallet to bank account fund transfers are among the top five transactions by volume. Inter-wallet fund transfer, cash deposit in wallet, wallet to bank account fund transfer, cash withdrawal from wallet, and bank account to wallet transfer are the top five transactions in terms of value.
While wallet growth is accelerating, how is the once-dominant Over-the-Counter (OTC) channel faring? According to SBP data, OTC volume was 39 million transactions worth Rs98 billion in January-March 2021, a yearly fall of 13% and 26%, respectively. This is despite the fact that the number of active agents has increased by 15% in the same time period, reaching 0.22 million. This adds to the evidence that wallets are on the rise.
According to historical data, the number of active m-wallets has more than doubled in the two years since March 2019. Before service providers can declare victory in a largely untapped market for mobile wallets, the current figure must double again and remain stable. The addressable market for this DFS product is over 100 million adults in the country. However, how quickly can coverage increase from 43 million to 100 million? Improving gender and regional inclusion in the account mix is another difficulty.
