Islamabad: Pakistan Prime Minister Imran Khan has launched the country’s first government-run instant digital payment system aimed at boosting the country’s formal economy.
Imran Khan termed the new payment system a “big step” towards realising Pakistan’s full potential and the cash economy as the “biggest obstacle” for the country to tap the true potential of the country’s 220 million population. The premier hoped that the new system will help improve digitalisation and resolve inefficiencies in the banking system.
What is Raast?
The payment system called “Raast” (or direct way) is an initiative of the State Bank of Pakistan (SBP) in collaboration with Bill & Melinda Gates Foundation and Karandaaz Pakistan to shift the country’s economy from cash to digital. Pakistan’s first instant payment system will offer digital, easy-to-use, efficient and cost-effective payment options to the people. It has been described as “a catalyst for providing sustainable opportunities to small businesses and individuals”.
There are a few private digital cash transfer systems, such as Jazzcash and Easypaisa, but Raast would be the first to link government entities and financial institutions.
How will it help?
Digital payments only account for 0.2 per cent of Pakistan’s nearly 100 billion transactions whereas the share of digital transactions in other peer countries range from 1.5 to 7 per cent, according to SBP. Raast digital payment system will boost digitalisation, increasing financial inclusion in the country and facilitate the businesses.
• Boost financing for small businesses.
• Promote enabling regulatory environment for new players.
• Facilitate individuals, businesses, fintechs, government entities
Improve banking and accelerate digitalisation
SBP Governor Dr Reza Baqir said that the new payment system, which is in line with best international standards, is a step towards modernising Pakistan’s banking and payment systems and to facilitate fintechs and businesses particularly. “The state-of-the-art faster payment system will provide cheap and universal access to the people of Pakistan especially those who are financially excluded and less privileged like women,” Dr Baqir said. The faster payment system will help spur economic growth especially by facilitating small businesses and individuals.
He thanked the Bill & Melinda Gates Foundation, the World Bank, Adviser to PM for Institutional Reforms Dr Ishrat Husain, Queen Maxima of the Netherlands, and the British High Commission for supporting digital financial inclusion in Pakistan.
The system will be rolled out in three phases, starting with bulk payment module, which will include digitisation of payments, salaries, pensions and other payments of government departments. In the next phase, Raast will digitise payments of micro and small business owners, and finally seamless person-to-person payments.
Gates Foundation CEO Mark Suzman virtually joined the ceremony and said that the progress towards digitalisation made in the last three years was “remarkable”. Talking about the new system, he said: “With Raast in place, individuals, small businesses and government agencies will be able to transact seamlessly and at low cost”. He said that the foundation is happy to support accelerating efforts towards digital financial inclusion in Pakistan and hoped that “full range of government payment programmes in Pakistan will be routed through Raast” soon.
The UN Secretary-General’s Special Advocate for Inclusive Finance for Development (UNSGSA), Queen Maxima of the Netherlands, described the system as “important milestones on the journey to a more inclusive financial system and to a digital economy” and will particularly benefit the vulnerable segments.