KARACHI: Digital payments, reaching 84 per cent of the overall payment ecosystem, have practically reached close to wrapping up paper-based banking in Pakistan.

The State Bank of Pakistan (SBP) released its annual report on Friday, highlighting the significant advancements in the national payment ecosystem during 2023-24. The report underscores the remarkable growth in digital payments, driven by the increasing availability and adoption of digital payment channels, reflecting a growing reliance on these systems by customers across the country.

The report reflects the visible transformation of banking in the country. The report, in detail, shows the ongoing transformation of Pakistan’s payment landscape towards digital payment.

“The retail payments have seen extraordinary growth in FY24, with the volume of transactions rising from 4.7 billion to 6.4bn, and the value of these transactions increasing from Rs403 trillion to Rs547tr — a growth of around 35pc in both volume and value,” said the report.

“Importantly, the share of digital payments by volume has surged from 76pc in FY23 to 84pc in FY24,” said the report.

The report said this expansion is attributed to the growing number of digital channel users, facilitated by the convenience and variety of products offered through mobile banking apps, internet banking portals, and mobile wallets.

“Mobile app banking users increased by 16pc, internet banking users by 25pc, while Branchless Banking (BB) mobile app wallet users grew by 2pc, and e-wallet users by 85pc annually during FY24,” said the report.

The report also highlights the pivotal role of digital payments made through mobile banking apps and internet banking portals, which collectively saw a 62pc increase in transactions to 1,346m, with the value of these transactions rising by 74pc to Rs70tr. Similarly, mobile app-based wallets experienced substantial growth, with customers making 2,697m payments through their BB mobile app wallets and 85 million through EMIs’ e-wallets.

The expansion of the POS (point-of-sale) machine network has also contributed to the growth, with the number of POS machines increasing by 8.9pc to 125,593, supporting card-based transactions at a growing number of retail outlets and stores. E-commerce payments have also seen a remarkable shift, with 87pc of digital payments for e-commerce now being initiated through bank accounts or digital wallets.

“A total of 309m e-commerce pay­ments were made during FY24, with a transaction value reaching Rs406bn,” said the report.

The SBP’s report highlights the resilience and robustness of Pakistan’s payment infrastructure, positioning the country as a leader in digital financial services within the region.

“As the payment ecosystem continues to evolve, the SBP remains committed to fostering innovation and further strengthening the digital financial landscape in Pakistan,” said the report.

Published in Dawn, October 12th, 2024