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Driving Financial Inclusion through Payments FED Seminar WTO March 2017
2
Aspiration for Financial Inclusion 2020
FINANCIAL INCLUSION ASPIRATION
16%
3%
1.4%
50%
25%
10%
2015 2020
ADULTS WITH TRANSACTION ACCOUNT
WOMEN WITH TRANSACTION ACCOUNT
ADULTS WHO SAVE AT FORMAL INSTITUTIONS
3
Financial Inclusion in Pakistan
51% 49%
PAKISTAN POPULATION INDICATORS
**Reference: Access to Finance Survey by State Bank of Pakistan 2015 http://www.a2f2015.com/highlights
TOTAL POPULATION Estimated July 2016
193 Million
FINANCIAL INCLUSION INDICATORS**
Gender Split Adults (18 and Above)
55%
Pakistan Bureau of Statistics
11%
1%
16%
7%
2008 2015
TRANSACTIONAL ACCOUNTS
FORMAL FINANCIAL SERVICES*
*Includes P2P (OTC), Insurance, National Savings, Post Office and Credit through micro finance institutes
# of Banks and DFIs
54
# of Bank Accounts
43.4M
4
Drivers of Financial Inclusion
Digital Transaction Accounts
Access Points and Infrastructure
Financial Service Providers
Financial Capability
NFIS DRIVERS
Providers Develop Systems, Knowledge, Products
Drive Scale and Viability – Digitize
Payments
Expand and Diversity Access Points
Expand Access to Digital Transaction Accounts
Raise Financial Awareness and Capability
(Consumers, SMEs)
Serve new Market Segments Profitably
and Safely
5
Plumbing is in place
41M Currently Access the
Internet
41million 3G/4G Subscribers
52K POS Machines
16 million Accounts
6
Driving Financial Inclusion through Digital Transaction Accounts
Various G2P and P2G program have been launched with Digital Payments
PKR 12.8 Billion BIS
P P
aym
en
ts
PKR 365.1 Million
WFP
Pay
me
nts
DIGITIZATION THROUGH
Mobile Account
ATM Cards
G2P Programs (Total PKR. 16B Disbursed Digitally in Q4 2016)
6,000 Monthly Passport Fee Collections
PKR 2.3 Billion ID
P P
aym
en
ts
PKR 213
Million EOB
I Pe
nsi
on
s Branchless Banking Retailers
4,000 Daily Traffic Challan
Collections
P2G Programs
DIGITIZATION THROUGH
Digital Collections
7
National Payment System
ACCESS POINTS
ATMs 11,400
POS machines 52,602
Bank Branches 14,219
Online Branches 13,926
Inte
rnatio
nal Settle
me
nts
Local Settlement
R T G S High Value Low
Volume Online Banking
IBFT, ATM Switch
Mobile Account 16M
Cheque Clearance for Partner Banks
Credit Cards 1.4 million
Debit Cards 28 million
RETAIL AND E-COMMERCE PURCHASING
SCHEMES SWITCHES
CLEARING HOUSE
8
Branchless Banking attributing to Financial Inclusion
2 Million 13 Million
13.5 Million 3.5 Million
15 Million
17 Million
Dec 2015 Sep 2016
A HIGH NUMBER OF INACTIVE ACCOUNTS
9
RETAIL MARKET
2K E-Retailers
$100M Worth Transactions
Per Year
>90% COD
>375 Merchants Accept Digital
Payments
5M Online Shoppers
ONLINE MARKET
136M
SIMs
72% Tele Density
38M
3G/4G Connections
MOBILE PENETRATION
*Reference: Pakistan Telecom Authority, World Bank, PEW Research Center, Business recorder Population Survey of Pakistan, State Bank of Pakistan http://www.indexmundi.com/pakistan/demographics_profile.html
Serving New Markets-Retail and E-Commerce in Pakistan
41 Million Access to INTERNET
900K+
Retailers
>95% Cash
16K Unique Retailers with
POS Machines
10
Opportunity
90% Of Total E-Commerce
Payments in Pakistan
SETTLEMENT TIME 7-15 Days
CHALLENGES TO ADDRESS
KYC
UI/UX
RELIABLE PAYMENT SYSTEM
FEES
11
Payments Future in Pakistan
PRINCIPLES OF THE PAYMENT SYSTEM
MICRO PAYMENT GATEWAY
BANKS
MOBILE MONEY
PROVIDERS
UTILITY COMPANIES
AGENTS
NON-BANKING FINANCIAL
INSTITUTIONS
CONSUMERS
• Open Loop Interoperability
Between all Providers
• Immediate Funds Transfers
Same Day Settlement
• Push Payments
Initiator should be the Payer
• Adherence to Open, International Standards
Accepted Payments Standards (ISO 20022)
• Adequate and Shared Fraud Service
Shared Risk and Fraud Management
• Efficient and Tiered KYC
Account Opening Requirements should Vary
• Transaction Irrevocability
The System should not Allow Transaction Reversal
LOW COST
AGENT DIRECTORY
MICRO TRANSACTIONS
12
Funded by
www.karandaaz.com.pk