KARACHI: The share of digital payments in retail transactions in Pakistan has increased by 6% to 80% on a year-on-year basis, the Pakistani central bank said on Saturday.

The State Bank of Pakistan (SBP) made the revelation in its quarterly payments system report for the first quarter (Q1, July-September) of the fiscal year 2023-24, which highlighted key advancements within the country’s payment ecosystem.

Digital payments accounted for 74% of retail transactions of the banking system in the same quarter last year, according to the SBP report.

The share of over-the-counter (OTC) transactions was 20% in retail transactions in Q1 of FY 2023-24, which was 87 percent by value and indicated customer preference for OTC channels for high-value transactions.

“Retail transactions mainly comprised of funds transfers (37%), cash withdrawals (36%), purchases at POS (point of sale) & e-commerce platforms (10%), bill payments & mobile top-ups (7%), cash/cheque deposits (7%) and 3% rest of the payments,” the report read.

“Funds transfers was the most prevailing transaction on digital channels by volume, while on OTC, cash/cheque deposits was the most prominent transaction mode.”

As of quarter-end, there were 33 banks, 11 microfinance banks (MFBs), four electronic money institutions (EMIs) and five payment service providers/system operators (PSPs/PSOs) that provided payment services across the country, according to the central bank.

In addition, real-time gross settlement system (RTGS) and the Raast instant payment system, both operated by the SBP, further enriched the country’s payments infrastructure, while 16 banks and MFBs extended their offerings to branchless banking (BB) services thereby expanding the accessibility of the financial services.

There were 17.0 million mobile banking users, 10.3 million Internet banking users, 2.4 million e-wallet holders (issued by EMIs) and 61.3 million m-wallet holders (issued by BB service providers) by the end of quarter. Alongside this, there were 54.3 million payment cards issued to customers, of which 79% were debit cards, 17 percent were social welfare cards and 4% were credit cards.

“In terms of volume, Large Value Payments (LVPs) settled by RTGS was 1.4 million amounting to PKR 199 trillion, whereas, retail transactions processed by banks, MFBs and EMIs during the quarter was 702 million with value of almost PKR 134 trillion,” the report read further.

“Retail transactions mainly comprised of funds transfers (37%), cash withdrawals (36%), purchases at POS & e-commerce platforms (10%), bill payments & mobile top-ups (7%), cash/cheque deposits (7%) and 3% rest of the payments. Funds transfers was the most prevailing transaction on digital channels by volume, while on OTC, cash/cheque deposits was the most prominent transaction mode.”

All these retail transactions were facilitated by a payment network provided by the banks, MFBs and EMIs, according to the SBP. This included a network of 17,768 bank branches, 18,117 ATMs, 118,444 POS terminals and 7,310 registered e-commerce merchants.