State Bank of Pakistan Introduces Digital Payments for Eid-ul-Azha Cattle Markets
Karachi: The State Bank of Pakistan (SBP) is set to revolutionize the traditional cattle markets during Eid-ul-Azha by introducing digital payment methods. This initiative aims to reduce cash transactions and promote financial inclusion in a market valued at an estimated Rs550-600 billion during the festival.
The SBP has partnered with 25 banks to facilitate QR code payments across 50 major cattle markets nationwide, utilizing the Raast Instant Payment System. This effort is designed to enable secure and convenient payments for both consumers and merchants, potentially capturing a significant portion of the cattle purchase market through digital banking.
“We are working with 25 banks and have selected 50 major cattle markets to enable QR code payment methods,” said Ahmed Sumair, Joint Director of SBP’s Payment System Policy and Oversight Department, at the 17th International Conference on Mobile Commerce 2024. Sumair highlighted that the selected markets span 15 cities, including Karachi, Lahore, Islamabad, Rawalpindi, Faisalabad, and Hyderabad, with six markets in Karachi alone.
The initiative addresses the challenges associated with carrying and managing large amounts of cash during the festival. By facilitating digital payments, the project aims to enhance financial inclusion among cattle farmers through Raast, SBP’s instant payment system. The QR code payment method offers a cost-effective alternative to traditional POS machines, allowing even small merchants to receive payments in real-time.
Reducing the high level of currency in circulation is a strategic objective for the SBP. By promoting digital payment acceptance points through QR codes, the central bank seeks to curb the use of cash across the country.
Yahya Khan, Chief Digital Officer at Bank Alfalah Limited, noted that approximately Rs8-10 trillion is currently in circulation in Pakistan, reflecting a high cash-to-GDP ratio. He recommended phasing out Rs5,000 notes and replacing them with Rs1,000 notes to further drive digital banking adoption.
Nadeem Husain, Coach at Planet N Group of Companies and Raqami Islamic Digital Bank, emphasized that digital banks’ success would hinge on services and lending, though they will face challenges in mobilizing deposits and ensuring cybersecurity to combat rising fraud. Muhammad Hamayun Sajjad, CEO of Mashreq Bank, added that the low operating costs of digital banks, due to the absence of physical branches, would enable them to offer higher profit margins to depositors, thus encouraging mobile financing.
This initiative by the SBP marks a significant step towards modernizing Pakistan’s financial ecosystem, particularly in the context of major cultural and economic events like Eid-ul-Azha.
