Driving Financial Inclusion through Payments FED Seminar WTO March 2017

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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

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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

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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

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Funded by

www.karandaaz.com.pk