Digital transactions record robust growth

KARACHI: The digital financial transactions in the country showed a robust growth during the fiscal year 2020-21, replacing the conventional banking transactions faster than expectations of the banking industry.

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.

SBP’s interbank mechanism processed 4.2m transactions worth Rs444.6tr

“Overall e-banking transactions registered a growth of 31.1 per cent which highlights a substantial increase in adoption of digital means for payments,” the SBP report said.

This growth was spurred by major uptake in mobile banking (29pc increase in the number of users and 133.6pc and 178.7pc hike in volume and value, respectively) and internet banking (32pc increase in the number of users and 65.1pc and 91.7pc up in volume and value, respectively).

“This promising growth was achieved on the back of 27 banks offering app-based banking along with other entities offering innovative payment solutions for accepting digital transactions,” said the report.

Adoption of digital payments for retail transactions during FY21 continued to show an upward trend. The number of card-accepting POS (point of sale) machines saw a growth of 47pc. “Transactions processed through POS machines reached as high as 88.8 million amounting to Rs453.1 billion, showing a year-on-year growth of 26.3 per cent by volume and 24.4 per cent by value,” said the SBP report.

The same trend was reflected in e-commerce transactions as well. The number of e-commerce merchants reached 3,003, which showed a double-digit growth of 76pc. Consumers carried out 21.9m online transactions worth Rs60.6bn on these locally registered e-commerce merchants during FY21, which showed a significant growth of 114.8pc and 74.1pc in terms of volume and value, respectively.

Similarly, on the card issuance side, as of end-June 2021, there were total 45.9m cards in circulation, mainly comprising debit cards (65pc), social welfare cards (18.4pc), ATM only cards (12.6pc), credit cards (3.7pc) and prepaid cards (0.3pc).

“Collectively, these cards processed 708.7 million transactions amounting to Rs8.4 trillion during FY2021. The number of debit cards at the end of FY2021 has been 29.8 million, observing a growth of 11.8 per cent and annualised growth of 13.8 per cent during the last four years,” said the SBP report.

The transactions processed through ATMs grew to 598.7m with the total value of Rs8.1tr. This showed a growth of 16.9pc by volume and 25.6pc by value, respectively, on a year-on-year basis.

The State Bank expects that going forward, the momentum of growth across all key areas of the digital payments ecosystem will continue to strengthen.