State Bank of Pakistan (SBP) has issued instructions to the banking industry for improving the acceptance of payment cards in the country to improve the digital payment services landscape and promote financial inclusion.
Three major announcements that have come from the State Bank of Pakistan include:
1) It is mandatory for banks to offer domestic payment scheme card, PayPak. This will be the first priority provided to customers. However, cards of international payment schemes like Visa, MasterCard and Union Pay may be issued upon customer requests.
2) Secondly, the merchant discount rate (MDR) i.e. the fee charged by banks to the merchants, will now be in the range of 1.5 to 2.5 percent. Prior to this, banks were allowed to charge a fee of their choice to the merchants.
3) Thirdly, the distribution of revenues generated from a merchant among the players including card issuer, card machine deploying entity and the payment scheme company, has also been rationalized to keep the incentives equitable among all the players.
With these measures, SBP is looking at an increase in payment card acceptance access points in the country. In turn, this helps the vision of a Digital Pakistan, a digital economy, while also promoting financial inclusion.
SBP has also taken note of another gap that lies in the traditional banking systems. Cheque clearing, which can take up to weeks, in far-flung areas of the country, can now be settled through PRISM. Pakistan Real Time Interbank Settlement Mechanism is a technology solution for the settlement of cheques. With this, there is an expected decrease in the processing time for clearing of payment instruments in areas that are not equipped with 100% banking services.
Financial institutions may also use this as an opportunity in far-flung areas, to leverage digital channels for their settlement obligations and cheque clearing.
SBP launched the National Payment Systems Strategy in November 2019. Since then, the regulator has taken a number of steps to promote digitization of payment transactions in the country.