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Mobile-money infrastructure taking roots in Pakistan

Published on 22nd Aug, Edition 34-35, 2016


Internet is the most fundamental enabler of economic and social development of the 21st century through which mobile banking refers to payment services operated under financial regulation and performed via mobile device. Now Instead of paying bills in cash, cheque, credit or debit cards, paying bills through mobile phone is a prompt facility.

Mobile banking has gained momentum due to the innovative technology. According to GSMA (Global System for Mobile Communications Association) “Connected Society Program”, 3.2 billion people are online through Internet whereas out of this, around 2.4 billion are using mobile phones and directly contributing to the digital economic system. Around 4 billion people are still unable to use Internet, which means that they are still offline and unable to incorporate in the digital economic system.

There are some fundamental models of mobile banking, which are used and also recommended by GSMA under its Mobile Money Program. These include: Premium SMS based transactional payments, Direct Mobile Billing, Mobile Web Payments (WAP), Contactless NFC (Near Field Communication).

During the first quarter of fiscal year 2015, the import of smartphones in Pakistan has seen a tremendous growth of 124 percent year-on-year. There will be 40 million smartphones in Pakistan by December 2016, according to an estimate. Dollar 100 million is the overall size of the fast growing e-commerce market in Pakistan that has increased two-thirds from dollar 60 million as of December 2014.

Pakistan’s mobile-money infrastructure has grown rapidly since the launch of the first domestic initiative in 2009. A banking and telecommunications regulatory framework, and active private sector participation have enabled this expansion. Five cellular mobile companies currently operating in Pakistan have launched mobile-money systems in partnership with financial institutions.

Since the Mobile Banking has proved a viable channel for the un-served and underserved masses to access financial services the banking accounts are only 37 million whereas the number of borrowers is as low as 6 million. This indicate that there exist a large financially excluded population, facing difficulties in buying goods and services, paying utility bills, borrowing and saving, or investing.

Rising mobile banking

State Bank of Pakistan report reveals e-banking transactions witnessed growth of 11.32 percent as of Rs9.45 trillion worth of transactions were made in first three months of 2016. Banking transactions through cell phones has become a popular mode of payment in Pakistan as the introduction of 3G/4G has pushed mobile banking transactions up by 5 percent to Rs26 billion in second quarter of fiscal year 2015-16.

According to the Payment Systems statistics report released by State Bank of Pakistan, Pakistani banking consumers made Rs25.9 billion worth of banking transactions in second quarter (January-March) of fiscal year 2016, registering 4.80 percent growth over mobile transaction of Rs24.7 billion in first quarter of this fiscal year. E-banking transactions also witnessed significant growth by 11.32 percent in second quarter as Rs9.45 trillion worth of transaction have been made in first three months of this year by the banking consumers as compared to Rs8.50 trillion in last quarter of 2015.

Payment through mobile increased by 2.25 percent to Rs733 million against Rs717 million in previous quarter, similarly account-to-account fund transfer through mobile increased by 5.46 percent.

However, utility bills payments through mobile phones witnessed a decline of 17.57 percent in second quarter of this fiscal.

Pakistan Realtime Interbank Settlement Mechanism (PRISM) transactions show an increase of 5 percent in volume and 19 percent in value during the second quarter of fiscal year 2016.

The major share in increase of number of Pakistan Realtime Interbank Settlement Mechanism transactions was contributed by Interbank Funds Transfer.

In second quarter of fiscal year, Automated Teller Machine (ATM) transactions showed a decrease of 2.41 percent in volume and 3.51 percent in value as compared to last quarter of fiscal year 2016.

The volume of Real Time Online Banking transactions rose from 29.5 million to 32.7 million whereas the value increased by 13.5 percent i.e. Rs7.2 trillion to Rs8.2 trillion caused by increase in real time cash withdrawals and deposits and inclusion of Microfinance Banks (MFBs) data in payment system statistics. Non-financial transactions declined by 4.34 percent.

During the second quarter of current fiscal year, the network of ATMs continued to grow reaching from 10,099 to 10,736. Further, 5,689 POS machines were added to the network, showing a growth of 12.82 percent as compared to first quarter of FY16.


The number of cards issued by banks has also increased by 16.27percent, reaching the total of 33 million by the end of the quarter under review. This increase is mainly caused by addition of MFBs issued 3.7 million ATMs only cards in payment system statistics in this quarter.

During the current quarter, registered Internet centre, mobile and call centre banking showed a growth of 3.94 percent.

Mobile Banking can also help in increasing e-commerce trend in Pakistan. With over 30 million broadband and 27 million mobile data users, Pakistan is witnessing an Internet boom. Also with many affordable Internet bundle packages that are offered by the telecom operators coupled with the increase in 3G/4G coverage and the rise in affordable smartphone users.

Realizing the potential of mobile banking, recently Pakistan Telecommunication Authority (PTA) and State Bank of Pakistan (SBP) have jointly signed a Memorandum of Understanding (MoU) on Regulatory Framework for Mobile Banking Interoperability in order to frame regulations for mobile banking.

With convenient, secure and instant payments in place, Pakistan is truly about to witness the dawn of the second generation of e-commerce in the country; E-Commerce 2.0.

Ufone has also introduced its services for mobile money by launching “UPaisa Solution”. UPaisa was launched in 2013 in collaboration with U Microfinance Bank Ltd. It claims to have the largest agent networks in Pakistan as it provides convenient access to financial services to even the remotest locations of Pakistan.

Mobilink along with Waseela Microfinance Bank has also introduced “Mobicash” as branchless banking system. Mobicash is no doubt playing its due role in giving people of Pakistan the absolute financial liberation in far flung areas of the country.

There are also many banks that have realized the worth and demand of branchless banking and also initiated their mobile money services in order to provide financial solutions to those who don’t have accounts in their banks. HBL Express, UBL Omni etc. are such other non-teleco companies in this field.

Every initiative needs time to grow especially in a country like Pakistan where technology advancement is interlinked with government willingness to be part of this race. Country’s branchless banking sector based on mobile banking is proving to be a driving force to penetrate into the finically excluded geographies.

Pakistan’s micro finance banking sector has also increased the use of innovative technologies and is playing a vital role to provide financial services in far off areas of the country while offering multiple innovative services.

Pakistan’s mobile-money infrastructure has grown rapidly since the launch of the first domestic initiative in 2009. A banking and telecommunications regulatory framework, and active private sector participation have enabled this expansion.

Since the e-commerce in the country taking its root amid convenient, secure and instant payments system, this situation indicates that Pakistan has the potential and is also ready to adopt more modern mobile payment services.


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