KARACHI: In FY23, e-banking transactions constituted 85 per cent of total payments processed by banks and microfinance banks (MFBs), while the remaining 15pc were paper-based, according to the State Bank of Pakistan’s annual report on “Payment Systems Review- FY23”, released on Wednesday.

This percentage increased from 80pc for e-banking and 20pc for paper-based transactions in FY22, indicating a gradual shift towards digital channels, possibly influenced by the post-Covid era where many customers adapted to digital channels for their daily financial needs.

“It is still a formidable challenge in overcoming the ingrained preference for cash based transactions as evident from high currency in circulation (CiC) and the persistent influence of the informal economy, both of which continue to play a regressive role in the broader promotion of digital payments,” said the SBP.

Banks and MFBs processed 2.073 trillion e-banking transactions worth Rs167.4 trillion during FY23, marking an annual growth of 28.6pc by volume and 21.4pc by value.

The report indicates that real-time online branches transactions had the largest shares (68.1pc) of e-banking transactions by value, followed by internet and mobile phone banking with a combined share of 23.9pc.

However, in terms of the number of transactions, internet and mobile phone banking held the highest share at 40.1pc, while ATM-based transactions stood at 39.1pc.

The number of payment cards in circulation grew by 24pc compared to the last year, reaching 58.1 million cards by the end of FY23. Similarly, internet banking users increased by 15.1pc to 9.6m, while mobile phone banking users rose by 30.2pc, reaching 16.1m in FY23. Similarly, branchless banking mobile app users also saw significant growth of 42pc, reaching 57.8m as of FY23 compared to 40.8m in FY22.

Furthermore, there was a 9.9pc growth in point of sale terminals and a 3.9pc increase in the number of ATMs installed during this period.

“The e-commerce sector also flourished, as merchant registrations with banks/MFBs saw an increase of 41pc in comparison to previous fiscal year,” said the report.

Electronic money institutions (EMIs) began their commercial journey in FY-22 in the digital payment sector and showed steady growth by opening more than two million e-wallets and processing 86.8m transactions worth Rs234 billion as of June 2023. EMIs also on boarded 4,956 micro-retail merchants and opened approximately 47,000 freelancer e-wallets.

Published in Dawn, September 28th, 2023