In the quarter ended March 31, 2021, the number of mobile and internet banking customers, as well as e-commerce transactions, exhibited a high growth trend in Pakistan, indicating that a silent digital payment revolution is on the way.Surprisingly, the number of cash and other paper-based financial transactions (in terms of volume), as well as the number of physical bank branches, declined during the quarter under review, indicating that the online payment system is gaining traction and will change the banking landscape in Pakistan, according to Pakistan’s central bank on Monday.
“Commercial banks in Pakistan are expanding their digital infrastructure to support electronic payments, which is supplemented by the State Bank of Pakistan’s (SBP) enabling policies,” the central bank stated in its Quarterly Payment System Review (QPSR) for the third quarter (Jan-Mar) of fiscal year 2020-21.
Over the previous few quarters, the number of people using online and mobile banking has risen dramatically. When compared to the previous quarter, Internet banking users increased by 10% to 4.98 million, and by 30% when compared to the same quarter the previous year.Similarly, mobile banking users increased by 5% quarter over quarter to 9.86 million, representing a 20 percent growth over the same period last year.
For the past few quarters, e-commerce retailers have also been on the increase. The number of e-commerce businesses increased by 5% to 2,523 in the January-March 2021 quarter, compared to the previous quarter, and by a whopping 62 percent when compared to the same quarter last year.
“The data may lead us to conclude that customers are beginning to see the value of digital payment channels in our daily lives. This goes hand in hand with customers’ growing confidence in the use of digital channels, according to the SBP.
Banks/microfinance banks (MFBs) have reported 16,223 bank branches, with 107 being abroad branches. All branches, with the exception of 35, offer online banking to its customers.
“We have seen a decrease in the number of branches,” the central bank said, “indicating that the industry is slowly appreciating the benefits of digital payment infrastructure that digital channels offer to the total consumer experience and its influence on the bottom line.”
In the quarter under review, the number of financial transactions via e-banking (including mobile, internet, and e-commerce) climbed by 4% to 309.5 million, up from 296.7 million in the previous quarter ending December.
In the January-March 2021 quarter, the value of e-banking transactions increased by 5% to Rs22.48 trillion, up from Rs21.47 trillion the previous quarter.
Real-Time Online Branches (RTOBs), ATMs (automated teller machines), POS (point of sale), and call centres are some of the other e-banking payment options. “With 49 percent of transactions (volume in e-banking), ATMs processed the majority of the chunk.”
During the quarter under review, merchants processed about 5.6 million transactions worth Rs15.3 billion. In the January-March 2021 quarter, the number of paper-based financial transactions fell by 4% to 100.2 million, down from 104.8 million the previous quarter.
However, the value of paper currency-based transactions increased by 1% in the January-March quarter to Rs37.7 trillion, up from Rs37.2 trillion in the previous quarter ending December 31, 2020.
Despite the availability of other financial services on ATMs, cash withdrawal is still the most common usage of the machines in the country. “Among other ATM services, such as paying utility bills and transferring funds through the machines, cash withdrawal through ATMs has the biggest share of 96 percent by volume.”
The industry had installed 16,175 ATMs in the country by the end of the quarter, a rise of 134 ATMs. This indicates that the banking industry installed 1.5 ATMs every day on average.
During the quarter under review, the industry deployed almost 4,000 POS machines, bringing the total number of POS machines deployed to an all-time high of 67,099.
According to the most recent quarterly payment report, the total number of bank accounts in the country climbed to 62 million, with a population of 211.93 million.
On March 31, 2021, the total value of money in circulation was Rs6.86 trillion.
The overall number of payment cards issued in Pakistan climbed to 44.5 million as of March 31, 2021, up from 44.2 million the previous quarter. According to the survey, over 64% of these cards are debit cards, 4% are credit cards, 17% are social welfare cards, and 15% are ATM-only cards.
The number of all sorts of financial transactions in the banking sector increased by 2% to 410.8 million, while the value of such transactions increased by 10% to Rs169.51 trillion in the quarter under review, compared to the preceding quarter.
