Branchless Banking Flourishes with 16 New Entrants in 1QFY24

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Embracing a dynamic shift, sixteen banks and Microfinance Banks (MFBs) have broadened their horizons by venturing into Branchless Banking (BB) services in the first quarter of FY24. This strategic move is highlighted in the quarterly payment systems report released by the State Bank of Pakistan (SBP), showcasing a significant expansion in the accessibility of financial services.

As of the quarter’s end in FY24, the financial landscape witnessed the active participation of 33 Banks, 11 Microfinance Banks (MFBs), 4 Electronic Money Institutions (EMIs), and 5 Payment Service Providers/System Operators (PSOs/PSPs), providing diverse payment services across the country.

The report underscores the pivotal role played by the Real-time Gross Settlement System (RTGS) and Raast—an instant payment solution—operated by SBP in further enhancing the country’s payments infrastructure.

Digital platform users experienced substantial growth, with 17 million mobile banking users, 10.3 million internet banking users, 2.4 million e-wallet holders (issued by EMIs), and 61.3 million m-wallet holders (issued by BB service providers) by the quarter’s end.

Furthermore, 54.3 million payment cards were issued, including 79% debit cards, 17% social welfare cards, and 4% credit cards. The share of digital payments in retail transactions within the banking system surged to 80% during the quarter, compared to 74% in the corresponding quarter of the previous year.

While Over-the-Counter (OTC) transactions constituted 20% of retail transactions this quarter, their share by value was a significant 87%, underscoring customers’ preference for the OTC channel, particularly for higher-value transactions.

In terms of volume, the Large Value Payments (LVPs) settled by RTGS numbered 1.4 million, amounting to Rs. 199 trillion. Simultaneously, retail transactions processed by banks, MFBs, and EMIs during the quarter reached 702 million, with a substantial value of almost Rs. 134 trillion.

Delving into the breakdown of retail transactions, funds transfers comprised 37%, cash withdrawals 36%, purchases at Point of Sale (POS) & e-commerce platforms 10%, bill payments & mobile top-ups 7%, and cash/cheque deposits accounted for 7%. The remaining 3% encompassed various other payment categories.

Funds transfers emerged as the dominant transaction on digital channels by volume, while on Over-the-Counter (OTC), cash/cheque deposits stood out as the most prominent transaction mode.

Facilitating these diverse retail transactions was the robust payments network provided by banks, MFBs, and EMIs. This encompassed a comprehensive network of 17,768 bank branches, 18,117 ATMs, 118,444 POS terminals, and 7,310 registered e-commerce merchants affiliated with banks/MFBs.

The quarterly payment systems report from the central bank not only highlights key advancements within the country’s payment ecosystem but also provides a comprehensive overview of digital transactional activities, emphasizing the transformative growth in branchless banking services.

Also Read: Retail Transactions in Pakistan Surge to Rs. 134 Trillion

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