Sunday, February 25, 2024

Pakistan considers direct payment system to make economy more inclusive | News from banks

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Only a fraction of financial transactions in Pakistan are going on, but a new government-run digital money transfer system aims to change that.

Pakistan has announced a new government-run instant digital payment system with the aim of boosting financial inclusion and government revenue in the country, where only a fraction of economic transactions occur on the books.

The new system, called “Raast” or “direct route,” will be rolled out in three phases, culminating in early 2022, officials at the State Bank of Pakistan said on Monday.

Developed through a multi-year collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation, with the support of the World Bank, the United Kingdom and the United Nations, Raast aims to strengthen the involvement of women in the formal economy.

Several private sector digital cash transfer systems that do not require a bank account – such as JazzCash, operated by telecom company Jazz, and Easypaisa, operated by telecom company Telenor Pakistan – are already available in Pakistan, but Raast would be the first to link government entities and financial institutions.

“I hope that in the years to come, we will look back and see this new digital public good as an important contribution to our common goal of giving all the tools they need to lift themselves out of poverty,” said Bill Gates in a press release. to Monday’s announcement.

Merchants, businesses, individuals, fintechs and government entities will be able to send and receive payments in near real time via the Internet, mobile phones and agents.

Government payments, including salaries and pensions, will also be made through Raast, along with payments for nation-wide financial support programs, such as the Benazir Income Support Program and the Ehsaas Emergency Cash program.

Pakistan’s ability to curb illegal financial transactions, including the funding of militant and extremist groups, has come under scrutiny by the international financial watchdog, the Financial Action Task Force.

Prime Minister Imran Khan, whose government has taken steps to automate the collection of transaction taxes and tightened banking rules, said abandoning a cash economy and fighting corruption were the main motivations by Raast.

“Pakistan collects the lowest taxes in the world,” Khan said. “We cannot build infrastructure, we cannot work on human development, nor educate children, nor improve hospitals.”


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