KARACHI: The coronavirus pandemic is accelerating Pakistan’s shift toward a cashless future as more people have been forced to overcome the fear of using digital payment methods, senior bankers said on Wednesday after a survey showed a significant rise in online shopping.
The survey by financial giant Visa on the impact of the COVID-19 pandemic on payment behavior in Pakistan revealed on Monday that 43 percent of consumers have reduced in-store shopping since the virus outbreak, while for their e-commerce purchases more than half (55 percent) were using cards instead of cash on delivery (COD).
“When the consumers started using technological platforms for the payment during the pandemic, they realized that it is easy and secured way of making transaction,” Syed Ibne Hassan, vice president of National Bank of Pakistan, told Arab News. “The fear related to the use of technology has subsided now and consumers are more familiar (with it).”
Pakistan’s economy has been dominated by cash as this payment method is considered safe by both buyers and sellers. Most wages and salaries are paid in cash as well. The pandemic, however, has forced more people to use cards and contactless payments due to movement restrictions and lockdowns following the outbreak. People also not want to have to touch cash and risk contracting the virus.
The Visa survey showed that 55 percent of online shoppers expressed their willingness to continue to make more purchases online, and 49 percent said they will continue to opt more for paying with card over COD. For in-store purchases, 56% of consumers say they will continue to use QR code payments with their mobile phones more.
“This trend accelerated during the COVID-19 pandemic. For perspective, at Habib Bank Limited (HBL), digital transactions on HBL Mobile and Internet banking have risen by almost 90 percent compared with the same period last year. This growth proves that COVID-19 fueled a rise in digital payments in Pakistan,” Sagheer Mufti, chief operating officer at HBL, told Arab News.
Pakistan’s central bank expects that migration to electronic means will boost the country’s gross domestic product (GDP) by 7 percent, create 4 million jobs, and result in $263 billion in new deposits — representing a potential market of $36 billion by 2025.
With increased usage of digital payments, however, rises the probability of cyberattacks.
“With increased usage both among experienced and first-time users, cybercriminals too are keen to capitalize on the increased activity and vulnerability, especially of first-time online shoppers,” Neil Fernandes, Visa’s head of risk for the Middle East and North Africa, said.
“That is why educating consumers about safe payment behavior is critical not only for the moment but as we move forward and adapt to the new normal.”
Coronavirus accelerates Pakistan’s shift away from cash to digital payment, bankers say
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Coronavirus accelerates Pakistan’s shift away from cash to digital payment, bankers say
- 43 percent of Pakistani consumers surveyed by Visa have reduced in-store shopping since the virus outbreak
- Pandemic has forced more people to use cards and contactless payments due to movement restrictions and lockdowns
IMF board approves $1.3 billion disbursement for Pakistan after completing loan reviews
- The approval comes after an October staff-level deal that awaited the board’s formal endorsement
- Economists say the money will boost Pakistan’s forex reserves, send positive signals to investors
KARACHI: The International Monetary Fund’s (IMF) executive board approved the release of $1.3 billion for Pakistan under two of its loan facilities, the Pakistani state media reported on Monday.
The board meeting was scheduled to take place during the day to decide on the Fund’s second review under the $7 billion Extended Fund Facility (EFF) and first review under the $1.4 billion Resilience and Sustainability Facility (RSF), a financing tool that provides long-term, low-cost loans to help countries address climate risks.
“The IMF executive board meeting has approved the third tranche of the loan program amounting to $1.3 billion,” the state-owned Pakistan Television reported.
It described the development as a major boost for Pakistan’s economy.
The IMF executive board’s meeting came nearly two months after a staff-level agreement (SLA) was signed between the two sides in October.
Procedurally, the SLAs are subject to approval by the executive board, though it is largely viewed as a formality.
A senior finance ministry official also confirmed to Arab News on condition of anonymity that the IMF had approved the tranche.
Economic experts said earlier in the day that the IMF disbursements would help Pakistan strengthen its balance of payments position.
Samiullah Tariq, group head of research at Pakistan Kuwait Investment Company Limited, said the IMF board’s approval would be an indication that Pakistan’s economy is on the right path.
“It obviously will help strengthen [the country’s] external sector, the balance of payments,” he told Arab News.
Until recently, Pakistan grappled with a macroeconomic crisis that drained its financial resources and triggered a balance of payments crisis.
However, the country witnessed financial gains in the last two years, recording current account surpluses and taming inflation that touched unprecedented levels in mid-2023.
Economists also viewed the IMF’s bailout packages as crucial for cash-strapped Pakistan, which has relied heavily on financing from bilateral partners such as Saudi Arabia, China and the United Arab Emirates, as well as multilateral lenders.
Saudi Arabia, through the Saudi Fund for Development, last week extended the term of its $3 billion deposit for another year to help Pakistan boost its foreign exchange reserves, which stood at $14.5 billion as of November 28, according to State Bank of Pakistan statements.
“In our view this [IMF tranche] will be approved,” said Shankar Talreja, head of research at Karachi-based brokerage Topline Securities Limited.
“This will help strengthen reserves and will eventually help a rating upgrade going forward,” he said.
The IMF board’s nod, Talreja said, would also send a signal to international and local investors regarding the continuation of the reform agenda by Pakistan’s government.
