Digital payment or digital transactions revolution – How people are moving towards digital payment

According to SBP digital transactions increased to 80% in the first fiscal year 2023-24. Undoubtedly, Pakistan has witnessed remarkable growth in digital payment transactions, which in turn helped to document the economy, which relied on cash.
The Rise of Digital Transactions:
The global shift towards digital transactions in Pakistan has been transformative. With increased internet penetration and government initiatives, the country is opening to digital financial services. Without any second thoughts, the digital payment revolution has reshaped the economy, bringing opportunities as well as challenges to Pakistan’s financial ecosystem.
The growth of electronic payment in Pakistan has been on the rise throughout the decade, particularly in the last few years. Of this shift, the availability of smartphones is attributed as the primary reason since it has helped to popularize financial transactions. From the Pakistan Telecommunication Authority and web-based research, it has been revealed that there are well over 183 million mobile phone connections and over 100 million internet users as of the year 2023. This is a strong base for DFS, and the connectivity has allowed financial services to grow.
Government and Regulatory Support
The Pakistani government and the SBP have encouraged using BPC to popularize digital payments. In line with this, the SBP’s plans include introducing the Raast Instant Payment System for secure, efficient, and low-cost payment. Raast’s real-time transaction platform will help keep up the pace in the Fintech space with ease as more people get aligned with formal financial systems.
In addition, the NFIS seeks to extend the reach of financial instruments and work towards the financial inclusion of the populace, especially the excluded groups. Thus, to give a broad perspective, Pakistan’s government set the target to have a 65 million banked population by 2023, which indicates that digital payment solutions play a critical role in the growth of the country’s banking system.
Financial Inclusion and Economic Empowerment
Digital payments have proved most helpful in increasing the accessibility to basic facilities in Pakistan. They offer an easy model of financial services to individuals and groups without requiring high-end banking facilities. This is even good news for rural residents, as the physical establishment of most banks is still limited. Digital wallets, especially mobile banking, are generally a way of embracing controlled and secured economic activities, as well as receiving government aid and cash transfers from the unbanked population.
Further, payments made through digital facilities also help women gain the authority to make financial decisions. Females who may be physically restricted or live in a culture that prevents their movement around society can now freely handle their financial dealings and run businesses from the comfort of their homes.
How People in Pakistan Are Moving Towards Digital Payment Gateways
With rapid technological development, innovation, government backing, and changing customer preferences, the usage of digital payment gateways has grown at a faster pace over the past few years in Pakistan. The general public is gradually moving towards cashless finance transactions, which socially, economically, and culturally influence how individuals spend cash. Here is how people in Pakistan are shifting toward digital payment gateways-
● Smartphone Usage:
Analyzing the primary reasons for using digital payments, growing possession of smartphones and internet penetration in Pakistan have been observed to be among the most general. Currently, there are around 183 million subscription mobile consumers and 100 million internet users, meaning the majority of the people have access to new technologies such as mobile internet services. Largely due to the increased usage in making financial transactions, it can be argued that smartphones most often serve as the primary means through which users gain access to mobile banking apps, digital wallets, or other online payment platforms.
● Rise of Mobile Wallets
Mobile wallets have now entered our households and are creating ripples in Pakistan’s economy. They allow for easy and efficient bill payment, funds transfers, mobile phone recharges, and even shopping. The interfaces and connections of agents on both platforms make it quite easy for individuals, especially those who are still out of the banking system, to do their financial activities.
● E-commerce Boom
Pakistan has experienced a fairly high growth rate in e-commerce and, therefore, a high usage rate for payment gateways. Shops available online have come up with long compatibility with payment options that make this kind of purchase possible. The shift towards e-commerce store purchases also escalated during the COVID-19 pandemic as people had to rely on online purchases for groceries and other essentials and, therefore, saw a rise in the use of digital modes of payments.
● Government Initiatives and Policies
The current federal government of Pakistan and the State Bank of Pakistan have played the most crucial role in advancing the country’s digital payments market. The impact can be attributed to the introduction of the Raast Instant Payment System. The idea behind Raast, which stands for Real-Time Automated Staff Transfer, is to enhance digital payments by providing faster and more secure ways of making transactions safely and conveniently between different institutions.
● Financial Inclusion Efforts
Financial specialists have been using the concepts of digital payment gateways to facilitate financial inclusion in Pakistan. They act as a means to provide basic financial services to people who don’t have access to the banking systems or have limited access to them. In this way, financial institutions innovate through digital wallets that require as few certificates as possible and are not complicated to create, thus integrating as many individuals into the formally acknowledged financial environment. This is partly a factor in the current advancement of traditional banking techniques, which is limited, especially in rural areas.
● Awareness and Education Campaigns
Finally, the challenge of the digital divide and lack of trust hampers the financial literacy level of the population participating in P2P platforms, both positively and negatively; however, different actors, such as the government and financial institutions, are starting education campaigns. These campaigns can inform consumers about the advantages of digital payments, empathize with safe ways of online payments, and the significance of adopting mobile money. Therefore, people’s willingness to engage in digital transactions is gradually slipping.
● Enhancing Cybersecurity
With more people embracing the digital payment system, greater concern is also needed for security. Financial institutions are increasingly adopting innovative safety measures to secure users’ information and business transactions. Encrypted codes, wary sign-up systems, and the regular replacement of security sequences are very important to fostering user confidence. This means that by enhancing the security of the platforms used to facilitate digital payment, more people will shift from using physical money to using digital platforms in making payments.
Conclusion
The digital payment system in Pakistan is a computerized onward process that makes the financial system of a country more effective and open. Due to government encouragement, technology intervention, and the growing ability of the populace to embrace e-services, the vital government goals of financial integration and economic enfranchisement in the country are set to be reached in the coming years. From this article, it can be comprehended that the future of digital payments in Pakistan is quite bright, and if the various efforts being put in place continue indefinitely, they will go a long way in positively transforming Pakistan’s economic destiny.