Raast Aims to Create Pakistan's Unified Digital Payments Infrastructure

[Riaz Haq]

Pakistan's central bankers have taken the plunge into the world of digital payments with their own offering: Raast. It aims to create an instant low-cost payment system that can seamlessly and securely connect government entities, a variety of banks, including microfinance banks (MFBs),  electronic money institutions (EMIs) and State Bank authorized payment service providers (PSPs) like 1Link and NIFT which may choose to take advantage of it.  Currency and coins in circulation account for about 43% of Pakistan's total money supply. The introduction of Raast is part of the government's effort to modernize and document the nation's cash-based informal economy. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion. Digital financial services will also promote e-commerce in Pakistan. 

Raast Digital Payment System. Source: State Bank of Pakistan

Raast Digital Payments:

Raast is a system of digital payment infrastructure. It is essentially a pipe that is intended to connect government and financial institutions with consumers and merchants with each other to process payments instantly at very low cost.  

Raast will be boosted by Pakistan government's decision to use it to pay salaries, pensions and pay welfare recipients under Benazir Income Support and Ehsaas Emergency Cash programs. 

It has been developed in-house by the State Bank of Pakistan  in collaboration with Karandaaz, Bill & Melinda Gates Foundation and supported by the World Bank, the British government and the United Nations.

Private Payment Apps:

Several private payment apps, including EasyPaisa and JazzCash, are already operating in Pakistan. These apps lack interoperability with each other. Each operates in its own silo. Neither of these offer links to financial institutions and government entities. 

There are also several EMIs (Electronic Money institutions) in Pakistan. These include NayaPay, SadaPay and Finja.  EMIs are not banks, but can store deposits. These are not tied to any banks or telcos. They could all use back-end plumbing offered by Raast. 

Payment Service Providers (PSPs) :

1Link and NIFT payment and switch networks, supported by different groups of Pakistani financial institutions, currently process the bulk of credit/debit card and ATM transactions as well as e-payments in Pakistan. State Bank's Raast promises to be cheaper and faster than these networks,. Raast also offers processing of e-payments by government entities. 

Raast Future Roadmap:

State Bank of Pakistan  intends to demonstrate Raast's usefulness by first processing government payments to individuals, including government employees and Ehsaas welfare beneficiaries, before expanding it for business applications.  SBP’s plan is to start person-to-person (P2P) payments using just the phone numbers in Q3/2021 and then bring merchants on board with QR codes by Q1/2022. 

Summary:

State Bank of Pakistan's launch of Raast digital payment infrastructure represents a great leap forward for the use of financial technology (FinTech) and financial inclusion in the  country.  It will also promote e-commerce in Pakistan. Undocumented economy poses a serious threat to the country because it creates opportunities for criminal activities and tax evasion.  Raast is part of the government's effort to modernize payment systems and document the nation's cash-based informal economy. 

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[Riaz Haq]

Raast is like Zelle in US


Qureshi@globosoftReplying to @UzairYounus and @haqsmusingsJust like


https://zellepay.com in USA. No need to disclose your bank account number to others. Just give/ publish your mobile number to receive payments. All you need is to attach/ register your mobile number with your bank account.


https://twitter.com/globosoft/status/1489462938234720257?s=20&t...

[Riaz Haq]

Sending money to family and friends used to be limited to cash or check. But the rise of digital banking apps and services has made it easier than ever to send money to loved ones quickly.

https://www.forbes.com/advisor/banking/sending-money-to-family-and-...

With an abundance of digital payment options available, choosing the best way to send money can get a little tricky. While many money transfer tools are free to use, some charge fees. And some solutions take longer to process transfers than others.

Here are eight ways you can send money to family and friends fast.

1. Zelle
Fees: None

Transaction limits: $500 weekly, may be subject to bank limits

Transfer time: Within minutes

Zelle is a popular peer-to-peer payment tool for sending and receiving money via bank transfers. The company managed roughly $519 million worth of transactions during the first half of 2020 alone. Individuals can enroll to use Zelle through their bank‘s mobile app or by downloading the Zelle app. Either the sender or the person receiving money must have access to Zelle through their bank or credit union.

Zelle payments are processed quickly, with the money accessible within minutes in most cases. If you’re looking to get money to loved ones fast, it doesn’t get much faster than Zelle. Zelle makes the process simple for the receiver, too, sending them a notification that explains what they need to do to receive their payment.

2. Venmo
Fees: 3% fee when using a credit card; other payment methods are free

Transaction limits: $4,999.99 weekly for person-to-person transactions after identity confirmation

Transfer time: Instant

Digital wallets are becoming more common, and Venmo is one of the most recognized wallet apps. Available on iOS and Android, Venmo makes instant payments to family and friends a breeze. Unlike Zelle, Venmo isn’t tied to specific banks. Both parties need a Venmo account, which is easily set up using a mobile phone number or email address.

Users can either add funds to their Venmo account or link an external payment method like a bank account or credit card. Venmo also allows users to sync their phone and Facebook contacts.

Once set up, users pay by inputting the contact name, including a reason for the payment and setting the transfer amount. The money shows up in the recipient’s Venmo account almost instantly. Users also can request money from other individuals.

3. PayPal
Fees: None for U.S. transfers funded by PayPal balance or a linked bank account

Transaction limits: $10,000 to $60,000 limit per single transaction for verified accounts; limits may vary by currency

Transfer time: Typically instant, eChecks may take up to six days

Millions of shoppers worldwide use PayPal, but it’s also a great way to send money to family and friends when needed. PayPal accounts are free to create and easy to use. All you need to do is sign up and then link a bank account or payment card. You only need the receiver’s email address or phone number. Senders can either transfer money into their PayPal account or just send money directly from their linked account or card.

Only some transfers are free, though, so be sure to check before sending money. For example, U.S. transfers funded with a credit card, debit card or PayPal Credit will pay 2.9% of the funded total plus a $0.30 fixed fee. For international transfers, the transaction fee is 5% of the sent total ($0.99 min to $4.99 maximum) for transfers made by cash or a linked bank account; for credit, debit or PayPal Credit, add 2.9% of the funded total and a fixed fee based on the currency.

PayPal is accessible online or via the PayPal mobile app. The app, available on iOS and Android, tracks all of your transactions for easy account management.

[Riaz Haq]

Raast Person-to-Person: PM believes SBP's latest initiative to enhance formal economy
Says launch will facilitate people in availing banking services


https://www.brecorder.com/news/40154585/raast-person-to-person-pm-b...

In the past fiscal year, e-banking transactions worth $500 billion took place in Pakistan. This is more than the size of our GDP, which is $370 billion: SBP Governor Dr Reza Baqir

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Prime Minister Imran Khan said on Tuesday that the rollout of Raast Person-to-Person, an initiative of the State Bank of Pakistan (SBP), would enhance the formal economy of the country by allowing people to utilise banking channels.

In his address at the launching ceremony of Raast Person-to-Person funds transfer and settlement services, Khan said the initiative is to facilitate the common man to avail banking services.

“The launch of this system would push people towards becoming part of the formal economy as banking system will be used.

“Furthermore, saving rates would improve,” said Khan, adding that countries only prosper when their saving rates are improved.

“However, Pakistan has one of the lowest saving rates in the world. The utilisation of our banking system is low. This results in a low tax-to-GDP ratio,” Khan added.


PM said that a population of 220 million is a major strength for any country as it offers a huge market.

“If this population is brought into the formal economy using modern tools, they can become a major strength. However, a major part of our population is out of the formal economy,” he said.

The prime minister informed that the government is using technological tools to enhance its tax system. “Only 2 million pay taxes out of the total population of 220 million,” he lamented.

“At the end of our five-year term, when our tenure will be assessed, I would look into only one factor and that is if we were able to reduce poverty level in Pakistan, and if we're able to reduce it we would see whether its effects were translated towards the bottom,” he said.

Food security: PM Imran emphasises importance of building dams

The PM said that he would consider it an achievement “if we were able to pull people out of poverty”.

He said that as per World Bank's latest report, despite the Covid-19 pandemic, the poverty levels have raised only marginally as compared to other countries.

“Lastly, I would urge the SBP to establish a cell, which would address concerns of Overseas Pakistanis, as they are our biggest assets,” he said.

Meanwhile, SBP Governor Dr Reza Baqir in his address stated, “Raast P2P initiative will bring a revolution in financial inclusion in Pakistan, and will ease making payments between persons.”

Talking about the features of Raast, the governor said that the payment system is fast, as it provides the end-user with a near real-time payment experience. “Secondly, Raast is free of cost, a bank cannot charge any sort of fee unlike other payment systems,” he said.

“Thirdly, we have made Raast simple to operate, all you need to register yourself through a banking app using one’s mobile number as a Raast ID, which will be linked to the bank account.

“Raast is available on all channels. Lastly, the customer is kept at the forefront, if the customer is not satisfied with the service of a bank, they can change their account and by delinking the Raast ID could connect with another bank, to avail the best banking features.

“We are confident that with these features the latest SBP initiative will be popular among the public,” he said.

Roshan Digital Account for overseas: PM asks SBP to provide online facility of real time money transfer

[Riaz Haq]

Raast Person-to-Person: PM believes SBP's latest initiative to enhance formal economy
Says launch will facilitate people in availing banking services


https://www.brecorder.com/news/40154585/raast-person-to-person-pm-b...

PM said that a population of 220 million is a major strength for any country as it offers a huge market.

“If this population is brought into the formal economy using modern tools, they can become a major strength. However, a major part of our population is out of the formal economy,” he said.

The prime minister informed that the government is using technological tools to enhance its tax system. “Only 2 million pay taxes out of the total population of 220 million,” he lamented.

“At the end of our five-year term, when our tenure will be assessed, I would look into only one factor and that is if we were able to reduce poverty level in Pakistan, and if we're able to reduce it we would see whether its effects were translated towards the bottom,” he said.

Food security: PM Imran emphasises importance of building dams

The PM said that he would consider it an achievement “if we were able to pull people out of poverty”.

He said that as per World Bank's latest report, despite the Covid-19 pandemic, the poverty levels have raised only marginally as compared to other countries.

“Lastly, I would urge the SBP to establish a cell, which would address concerns of Overseas Pakistanis, as they are our biggest assets,” he said.

Meanwhile, SBP Governor Dr Reza Baqir in his address stated, “Raast P2P initiative will bring a revolution in financial inclusion in Pakistan, and will ease making payments between persons.”

Talking about the features of Raast, the governor said that the payment system is fast, as it provides the end-user with a near real-time payment experience. “Secondly, Raast is free of cost, a bank cannot charge any sort of fee unlike other payment systems,” he said.

“Thirdly, we have made Raast simple to operate, all you need to register yourself through a banking app using one’s mobile number as a Raast ID, which will be linked to the bank account.

“Raast is available on all channels. Lastly, the customer is kept at the forefront, if the customer is not satisfied with the service of a bank, they can change their account and by delinking the Raast ID could connect with another bank, to avail the best banking features.

“We are confident that with these features the latest SBP initiative will be popular among the public,” he said.

Roshan Digital Account for overseas: PM asks SBP to provide online facility of real time money transfer

He said that Raast is part of the national payment strategy, which was launched back in November 2019. He added that this is a very advanced system and is available in only few countries including Malaysia, Turkey, Australia and UK.

Talking about the launch of digital banks, the SBP chief informed that the central bank would issue five licences. “These digital banks would cater to the common man,” he said.

Baqir said that due to the measures taken by the central bank to promote digital banking, in the past fiscal year e-banking transactions (non-cash based transactions) worth $500 billion took place in Pakistan.

"This is more than our GDP, which is $370 billion. Each year our e-banking transactions increased by 30% YoY.

“We are confident that these figures would improve further with the launch of Raast P2P initiative,” said Baqir.

Meanwhile, Finance Minister Shaukat Tarin in his address at the launching ceremony said that through Raast P2P, the country will see a boom in e-commerce activities.

“I believe that e-commerce would witness a boom with this initiative, and it will increase further in the next step when the SBP moves from person-to-person to person-to-merchant.

“The IT sector including freelancers is looking forward to this system, and they believe that this will bring a revolution, and growth in IT especially exports,” said Tarin.

[Riaz Haq]

Raast Person-to-Person: PM believes SBP's latest initiative to enhance formal economy
Says launch will facilitate people in availing banking services


https://www.brecorder.com/news/40154585/raast-person-to-person-pm-b...
---------

“The IT sector including freelancers is looking forward to this system, and they believe that this will bring a revolution, and growth in IT especially exports,” said Tarin.

1.2m new jobs expected: Over 70,000 housing projects worth Rs1.4trn approved: PM

He added that this system would also improve our savings rate, as people will use a bank account to avail this facility, and reduce the cash in circulation. “Saving rate has to go up to 30-40% in order to ensure sustainable growth,” he said.

Tarin informed that in the coming days the prime minister would announce further measures to help the lower, middle-class and salaried class, facing the brunt of rising inflation.

Raast (P2P)

Under Raast P2P fund transfers and settlement services, bank customers would be able to send and receive funds in their accounts using their bank’s mobile application, internet banking or over the counter services. To facilitate their customers, banks will also allow them to create a Raast ID by linking their preferred International Bank Account Number (IBAN) with their registered mobile phone number.

The customers can then share Raast ID with others to receive funds in their account. Bank customers can use Raast service for sending or receiving funds using their IBANs even if they do not have a Raast ID.

[Riaz Haq]

Digital cheque clearing, unified QR code for payments launched


https://www.dawn.com/news/1638880

KARACHI: In a move towards digitalisation of financial products and services, the State Bank of Pakistan (SBP) has introduced digital cheques clearing and a unified QR code for payments.

Announcing these initiatives at the 5th stakeholders’ meeting on Digital Financial Services, SBP Governor Dr Reza Baqir said the introduction of these digital services by the financial institutions will benefit all segments of society.

“The digital cheque clearing initiative will replace physical presentation and clearing of cheques thereby reducing the time involved substantially,” the SBP said on Wednesday.

Now one can send a scanned cheque and the bank would make payment or deposit the amount into the account of the receiver.

Speaking to Dawn, veteran banker Nadeem Hussain said the new clearing method will significantly reduce the cheque processing time, especially for ones deposited in bank branches of remote areas.

“Let’s not call it digital check clearing. It’s paperless clearing through a digital mechanism,” he said. It means a beneficiary can send the image of the cheque electronically to their bank instead of presenting it on the bank counter. The bank will then use the image of the cheque to process payment via NIFT, a pre-existing e-platform for clearing, processing, routing and switching of electronic transactions run by National Institutional Facilitation Technologies Ltd, a joint venture of six commercial banks.

Mr Hussain added that the move is a “big step” only in the local context as advanced economies adopted the paperless cheque processing mechanism 25 years ago.

“The second initiative, the introduction of a unified QR code, will allow payments by users from any digital application eliminating the need to use separate apps,” said the SBP.

As for the unified QR code, Mr Hussain said all banks that are in the merchant acceptance business will be required to adopt it. This will eliminate the need for retail shops to display different QR codes for different payment apps, he said. All banks will effectively have the same QR code, which will increase its usability.

At the Digital Financial Services meeting held on Aug 2, the stakeholders also announced formation of a joint task force of SBP and Pakistan Telecommunication Authority to work towards the prevention of digital financial services frauds.

In addition, the SBP and Federal Board of Revenue (FBR) have also agreed to form a joint committee to collaborate on a regular basis to increase digitisation in the economy.

“These and other initiatives have led to 30 per cent and 20pc growth in internet and mobile banking, respectively, in third quarter of FY21 compared to the same period last year.

Briefing on SBP’s Raast payment platform, the SBP governor said that the second phase of person-to-person payments would be launched by October for which banks are being integrated with Raast, a new instant payment system launched in January.

He said the SBP is actively exploring the development of open banking, which allows sharing, and leveraging of customer-permissioned information among financial institutions to facilitate consumer choice, promote competition and efficiency in the financial sector, and encourage the introduction of innovative products and services to benefit consumers.

Dr Baqir said that the SBP will continue to promote innovative digital financial services and is ready to facilitate these endeavors by resolving issues as far as possible. Governor Baqir appreciated stakeholders’ support in facilitating the digital initiatives of SBP, particularly by National Data Registration Authority (Nadra) and FBR in moving forward the drive for digital financial services.

[Riaz Haq]

E-banking transactions exceed GDP

https://tribune.com.pk/story/2343698/e-banking-transactions-exceed-gdp


Speaking at the launch of Raast Person-to-Person (P2P) Instant Payments System on Tuesday, the central bank governor said that e-banking transactions were considerably more than the country’s total gross domestic product (GDP), which currently stood at $370 billion.

“If the figure is $500 billion now, you can imagine the pace at which we are digitising,” he remarked, adding that those transactions showed a year-on-year growth of 30.6% in volume and 31.1% in value.

Baqir said that there were around 190 million mobile phone subscribers in the country whereas only 80 million people had bank accounts, meaning that there were over 100 million people who had mobile phones but they did not own a bank account.

“Therefore, there is a huge potential for enhancing financial inclusion,” he said and expressed hope that the Raast initiative would help bridge the gap.

The SBP governor pointed out that Raast was different from other programmes as it facilitated free-of-charge transactions within seconds. He was hopeful that people would take benefit of the revolutionary system.

The State Bank has taken many initiatives for ramping up the pace of digitisation. In this regard, the installation of Point of Sales (POS) machines has shown a growth of 50% and it is expected to rise further at a rapid pace.

In collaboration with the National Database and Registration Authority (NADRA), the SBP will also facilitate people in undergoing biometric verification remotely for opening bank accounts.

The new banking system will be established in line with the Roshan Digital Account that has been introduced for overseas Pakistanis.

“Individuals can use Raast platform in their daily transactions similar to cash and they will not have to pay any fees or charges for using this payment system,” Baqir said. “It is secure, convenient and free of risks compared to cash.”

[Riaz Haq]

Digital transactions record robust growth


https://www.dawn.com/news/1653511

According to the State Bank’s latest Annual Payment Systems Review (PSR) for FY21 issued on Friday, the transactions processed through the SBP’s large-value payments segment, known as Real-time Inter-Bank Settlement Mechanism (PRISM), recorded a growth of 60 per cent by volume and 12.8pc by value.

As of June 30 this year, the PRISM system had 51 direct participants — 34 banks, seven microfinance banks, nine development finance institutions and one non-bank entity (Central Depository Company). During FY21, PRISM processed 4.2 million transactions amounting to Rs444.6 trillion.

[Riaz Haq]

P2P payment system launched to boost financial inclusion

https://www.thenews.com.pk/print/930018-p2p-payment-system-launched...

Customers at some select banks will now be able to make P2P (person-to-person) transactions instantaneously through their mobile phones as central bank has started rolling out the second phase of Pakistan's first instant payment system, Raast.

The first phase—bulk payments, which enables government-to-person transfers instantly, was rolled out in January, 2021. Now, 21 banks and one mobile money services provider have kick-started the launch of the second phase of the system, allowing individuals to transfer funds to each other by creating their unique Raast ID, which is their mobile number, for receiving funds.

“A customer can login to his/her account via internet banking, mobile app and can create a Raast ID by linking his/her phone number with his/her account number,” Abid Qamar, chief spokesman SBP told The News in an email.

“This mobile phone number can then be used by a sender in place of a bank account number in the transfer of money through Raast. This will bring ease to the customers as typically people find it difficult to memorise or to have quick access to find the bank account number,” Qamar said.

In comparison, he said, remembering mobile number was easier and people had instant access to phone numbers on their mobile phones as well.

“However, it may be mentioned that even if receiving customers do not have a Raast ID, they can still receive funds in their accounts using the conventional interbank account number (IBAN) through Raast,” he explained.

“Few select banks, permitted by SBP, have already started to offer the facility of creating Raast ID and making payments using the Raast Service through their mobile apps or Internet Banking.” Qamar said.

The third phase would be focused on person-to-merchant payments (P2M).

Pakistan has had low electronic transactions for a number of reasons including low banking penetration, lack of trust and awareness of digital payment methods, limited interoperability, difficult accessibility, and high cost of transactions, according to the information posted by the SBP on its website about the payment system.

The real time gross settlement system of Pakistan provides instant payment settlements for large value and corporate transactions only. Raast would facilitate retail payment settlements, the central bank said.

Bankers and analysts, who closely track the payment system, say the addition of Raast to the existing payment gateways is a good development. They are watching whether it will pose a threat to the dominance of 1Link and National Institutional Facilitation Technologies—a platform for clearing, processing, routing and switching of electronic transactions.

The SBP has installed its own system and switch for this facility, while the Inter Bank Funds Transfers (IBFTs) use 1Link switch.

Pakistan is a country where a major chunk of the population is unbanked and relies heavily on cash-based transactions.

“Digital banking/payment in Pakistan is still a relatively new concept and the masses are not too keen to adopt – mostly due to an underlying fear of a lack of security with regards to digital payments as well as the reliability and dependency on cash,” said Khurram Mumtaz, digital and data analytics head at Standard Chartered Bank Pakistan.

“However, we see Raast as a gateway to make payments more seamless and connected, with a hassle-free experience between people, businesses, and organisations to disburse day-to-day low-ticket transactions and payments with a universal infrastructure,” he said.

P2P payments were made available to the clients for a while now via the IBFT. “The barrier to entry for new and upcoming payment systems providers and government entities would be much lower due to its low-cost nature,” Mumtaz added.

[Riaz Haq]

P2P payment system launched to boost financial inclusion

https://www.thenews.com.pk/print/930018-p2p-payment-system-launched...



Many countries, for example China with Alipay, has moved swiftly towards using digital payments for everyday usability and convenience and once the population builds confidence in the mode of digital payments, conversion towards the same would be easier and more secure than operating with cash.

“Standard Chartered Bank already had a P2P service available through the IBFT service. However, this service will supplement existing capabilities and will be available on Internet and mobile banking,” he replied to a query on whether his bank is providing this service (P2P payments) to the customers.

Apart from real-time settlement, the opportunity at hand is the convenience, speed, and ease-of-use. Transferring funds from one person to another can be accomplished through the click of a button. Another perk is the cost involved. Unlike many other payment solutions that involve several middlemen, P2P payments are between two parties. However, many platforms are beginning to use additional security features like biometrics and most send automatic notifications for every single transaction.

“One of the biggest challenges everyone will face is adoption of the service. People already using digital services will be more receptive to its usage; however, the real benefit will only come if people actually shift from cash. A concerted effort will be required from both the baking industry and the government to help educate people on the benefits and impacts,” Mumtaz said.

“Raast is expected to have API-based connectivity that will enable banks, fintech players, e-commerce platforms and utility companies to leverage this payment rail,” the Standard Chartered official added. Nameer Khan, Chairman MENA Fintech Association, said being a P2P system, it was an ideal facilitator for fintech players who were themselves working on enhancing the financial inclusion ratios across the country. With Raast, Khan said, the ecosystem for digital financial service providers was becoming extremely conducive, displaying a capacity for significant growth.

“Recently established EMIs, existing fintechs and upcoming fintechs are key enablers of a seamlessly connected payments ecosystem and P2P has been one of the strongest use cases of their platforms. All fintech players, local or global, will welcome this progressive step and upcoming future forward initiatives by the SBP,” MENA Fintech Association chairman said.