Despite changing patterns, cash remains biggest competition for contactless payments in Pakistan: survey

By Staff Reporter | Profit Mar 17, 2023

As many as 85% of people shopping online changed what website they were using to buy a product depending on whether or not there was an option to pay through debit or credit cards. The data was revealed as part of a survey conducted by Visa.

The survey shows changing consumer attitudes towards online payments. Despite being a cash-intensive economy, Visa has seen a significant shift towards digital commerce, mobile, and internet banking over the past few years. The COVID-19 pandemic has accelerated this shift in consumer behavior, with Pakistani consumers increasingly opting for digital payments over cash.

The survey also revealed that 67% of consumers chose to pay online instead of Cash on Delivery (COD) because of the security of the payment facility. In 2021, almost 50% of businesses were looking to offer digital payment services and eight out of ten small businesses considered it an essential part of doing business in Pakistan.

Keeping up with the rest of the world, Pakistan is fast adopting cashless transaction methods. The State Bank of Pakistan (SBP) processed 1,611.8 million e-banking transactions amounting to Rs 137.9 trillion, in the financial year 2022. This figure indicates an increase of 36% in volume and 59.4% in value of the translation on year on year (YoY) basis.

In conversation with Leila Serhan, Group Country Manager and Senior Vice President to North Africa, Levant and Pakistan (NALP) region,Profitlearned that fintechs are pushing towards financial inclusion. “Over the last few years, we have forged new partnerships with fintechs such as Tez Financial Services, SafePay, TAG and NayaPay to provide access to convenient and secure digital payments to underserved and underbanked segments of the Pakistani population,” she said. “Our Visa Everywhere Initiative (VEI) and Fintech Fast Track Program (FFTP) were created to empower more fintechs to showcase their ground-breaking solutions, which can help solve the payment challenges of the future. In 2021, Pakistan’s Safepay was among the winners of the VEI program,” she highlighted.

Pakistan offers immense opportunity and potential for the seamless shift towards digital payments. Last year, the rise of smartphone users and internet banking reached 8.4 million and 12.3 million respectively. Despite the figure, a huge population of 81% remains unbanked. The country’s cash-intensive economy, coupled with a highly unbanked population and limited digital infrastructure low point-of-sale penetration.

“We have seen some positive recent developments such as the State Bank of Pakistan has

recently issued licenses to five new digital banks. We believe this is a very positive development to drive more use cases and address underserved segments in the market,” added Serhan.

Visa’s Pakistan journey

Given that Pakistan is a cash-intensive economy, cash remains the biggest competition. Having said that, Visa has seen a significant shift towards digital commerce, mobile and internet banking over the last couple of years. COVID-19 has accelerated a shift in consumer behavior. According to Visa’s 2022 Stay Secure consumer survey, 85% Pakistani consumers would switch stores or online shopping sites and apps, based on the payment methods offered, with most consumers indicating a strong preference for digital payments over cash.

The COVID-19 pandemic has highlighted the instrumental role that fintechs play in championing small businesses, accelerating financial inclusion, and catalyzing economic recovery. As a trusted engine of commerce, Visa’s top priority has been to help businesses, especially small and medium sized businesses (SMBs), keep pace with and operate in a rapidly evolving world.

Over the past few years, Visa has made impressive strides in expanding its market share in Pakistan. With over 31 million credentials created and more than 104K terminals deployed, Visa has become a key player in the digital payments industry in Pakistan. The State Bank of Pakistan’s introduction of Electronic Money Institution (EMI) and upcoming Digital Banking licenses has further empowered fintechs to reach underserved and unserved segments of the population, and Visa has been a key partner in this mission.

Visa has forged new partnerships with fintechs such as Tez Financial Services, SafePay, TAG, and NayaPay to provide access to convenient and secure digital payments to the underserved/underbanked segments of the Pakistani population. In 2021, Pakistan’s Safepay was among the winners of Visa’s Everywhere Initiative (VEI) program. These fintechs have the potential to make a significant impact, and financial institutions and banks are incentivizing customers to use digital payments.

It has also partnered with banks, merchants, and processors in Pakistan to strengthen its market share. UBL became the first bank to sign the Visa Ready BIN Sponsorship program agreement, enabling fintech clients to issue Visa card credentials. HBL and Visa launched a mobile Point of Sales (mPOS) and QR Payments solution, JS Bank and Visa rolled-out a loyalty cashback service for cardholders, and Bank Alfalah launched Visa Corporate Credit Card.

Visa’s collaboration with Daraz University has also launched a ‘Practical Business Skills’ program to help small and micro-business owners make informed decisions to grow their businesses. Overall, Visa’s partnerships and strategic initiatives have helped strengthen its market share and drive digitization in Pakistan.

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