Pakistan has launched a government-run instant payments system as it looks to accelerate digitalisation and boost financial resilience.
The completion of the first phase of system, which is called ‘Raast’ , was announced by the country’s prime minister, Imran Khan, at an event hosted by the State Bank of Pakistan (SBP).
The central bank described Raast as providing ‘digital, easy-to-use, efficient and cost-effective payment options’, saying it is ‘expected to be a catalyst for providing sustainable opportunities to small businesses and individuals’.
The scheme has its origins in Pakistan’s national payments strategy, which was unveiled in November 2019. The strategy highlighted the cash-dominated nature of the country’s economy, noting that most salaries are paid with cash and that cheques remain widely used to make government and commercial payments. It described the financial digital ecosystem as ‘severely underdeveloped, both on the issuance and acceptance side’.
Raast has been developed in collaboration with US-headquartered philanthropic organisation the Bill & Melinda Gates Foundation (BMGF) and Karandaaz, a non-profit company that receives funding from the UK’s Foreign, Commonwealth and Development Office (FCDO) and the BMGF.
Phased deployment
The Raast system will be deployed in phases, starting with bulk payments, including the digitisation of salaries, pensions and other payments of government departments.
In subsequent phases, Raast will digitise payments of micro- and small-business owners or merchants; and facilitate person-to-person (P2P) payments including features such as sending payment requests and initiating payments using identifiers such as citizens’ mobile-phone numbers.
It is also envisaged that Raast will improve disbursements made under the country’s ‘Ehsaas’ initiative to address poverty and inequality, as well as the Benazir Income Support Programme (BISP).
Ehsaas is the umbrella name for government initiatives including an emergency cash scheme to help the most vulnerable during the Covid-19 pandemic. It also includes a target of achieving financial and digital inclusion for seven million citizens (90% women). BISP is a federal poverty reduction programme that has been running for more than 12 years.
High-profile champions
The national payment strategy highlighted that, as of 2019, only 21.3 per cent of all adults in the country have a transaction account and, of these, only seven per cent are held by women.
Mark Suzman, chief executive of the BMGF, shared a prepared statement via video message from co-chair Bill Gates, who said: “I hope that in years to come, we will look back and see this new, digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty. Our foundation is happy to support accelerating efforts towards digital financial inclusion in Pakistan.”
Queen Máxima of the Netherlands also addressed the event via video-link in her capacity as the United Nations secretary-general’s special advocate for inclusive finance for development.
A long-standing advocate for financial inclusion in Pakistan, Queen Máxima described Raast as “particularly significant for vulnerable segments such as women and the poor, and especially during this pandemic.”
She said that “getting design elements [of such payment gateways] right is vital to increase competition between all providers, lower costs, and increase value to customers”, adding that “there are 17 countries [that] have functioning faster payments infrastructures, including Singapore and Mexico, and my home country the Netherlands. Payment specialists from all these countries can assist and share their experiences.”
WATCH: State Bank of Pakistan’s video-reel (2 min 56 sec), which says that – with the launch of Raast – Pakistan is “entering a new era of digital transformation where every citizen can make and receive payments digitally with ease and convenience” =>
