Digital payments capture majority of retail transactions in Pakistan

WEB DESK: In the third quarter of the fiscal year 2023-24, digital transactions took a significant lead in Pakistan’s financial sector, accounting for 83 per cent of the 844 million retail payments processed by banks and Electronic Money Institutions (EMIs).

The remaining 17 per cent were Over-the-Counter (OTC) transactions at bank branches, according to the Payment System Review issued by the State Bank of Pakistan (SBP).

The surge in digital transactions is primarily driven by fund transfers, bill payments, purchases of goods and services, and mobile top-ups.

Additionally, customers are increasingly relying on Automated Teller Machines (ATMs) over bank branches for their cash withdrawal needs. The network of 18,655 ATMs across the country maintained an impressive average uptime of 96.5 per cent during the quarter.

Mobile banking emerged as the most preferred method for digital transactions, holding a 43 per cent share, with 301 million transactions amounting to Rs12,955 billion.

Internet banking transactions also saw growth, increasing by 3 per cent to 59 million transactions valued at Rs6,467 billion. Point-of-Sale (POS) transactions rose by 8 per cent in volume to 71 million and 6 per cent in value to Rs394 billion.

While e-commerce transactions (card-not-present) experienced a 13 per cent decline in volume, reaching 10 million, their value increased by 3 per cent to Rs52 billion. The majority of POS merchants are retail outlets, clothing and apparel stores, restaurants, and fuel stations, whereas online clothing and apparel stores dominate the e-commerce landscape.

By the end of the quarter, there were approximately 59 million branchless banking mobile app users, 57 million payment card holders, 17 million mobile banking app users from commercial banks, 11 million internet banking users, and 3 million EMIs’ e-wallet users.

The digital user base grew by around 8 per cent during the quarter, indicating a positive trend in the adoption of digital payments.

In summary, the increasing trend of digital transactions across various channels is driven by a robust payment infrastructure and customers’ growing preference for mobile and internet-based channels.

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