Pakistan Cards & Payments: Opportunities and Risks to 2023

Pakistan Cards & Payments: Opportunities and Risks to 2023

Summary

Pakistan is a cash-dominated society. Use of cash for day-to-day transactions remains prevalent among Pakistanis due to factors such as a high unbanked population, limited financial awareness, and inadequate payment infrastructure. Financial inclusion remains a top priority, with the government and other commercial banks introducing initiatives to improve banking penetration. The government launched the National Financial Inclusion Strategy (NFIS) in May 2015, aiming to bring 50% of the adult population into the formal banking system by 2020.

Adoption of basic bank accounts, increasing the number of bank branches, offering banking services via banking agents, expanding ATMs and point of sale (POS) terminals, and promoting financial awareness are the key objectives. The rise of Islamic banking is also expected to support payment card growth. Branchless banking is among the main drivers of financial inclusion in the country. The number of accounts opened via branchless banking channels increased from 37.3 million in 2017 to 47.2 million in 2018.

Debit cards account for 96.3% of total payment card transaction value in 2019, including ATM withdrawals. The introduction of low-cost “Asaan” accounts and an expanded agent banking network have driven debit card adoption. Banks are increasingly using banking agents to reach out to the unbanked population in rural areas. There were 425,199 agents operating in Pakistan as of December 2018.

Credit cards are not popular among Pakistani consumers, accounting for only 3.7% of total payment card transaction value in 2019. This is due to both banks following stringent application procedures and religious reasons, as Islam forbids interest. With the growing popularity of Islamic banking, banks are offering Sharia-compliant credit cards.

E-commerce grew significantly from PKR6.3bn ($45.1m) in 2015 to PKR28.9bn ($206.6m) in 2019 at a review-period compound annual growth rate (CAGR) of 46.3%. This growth was mainly supported by the expansion of internet access and rising smartphone penetration. New e-commerce merchants and government initiatives have also supported growth. Online retailers conduct various shopping events to boost their online sales. Meanwhile, the availability of alternative payment solutions such as Easypaisa, JazzCash, MCB Lite , and FonePay also benefits the e-commerce space.

The report “Pakistan Cards & Payments: Opportunities and Risks to 2023” provides detailed analysis of market trends in the Pakistani cards and payments industry. It provides values and volumes for a number of key performance indicators in the industry, including cash, cards, direct debits, and cheques during the review-period (2015-19e). The report also analyzes various payment card markets operating in the industry and provides detailed information on the number of cards in circulation, transaction values and volumes during the review-period and over the forecast-period (2019e-23f). It also offers information on the country's competitive landscape, including market shares of issuers and schemes.

The report brings together research, modeling, and analysis expertise to allow banks and card issuers to identify segment dynamics and competitive advantages. The report also covers detailed regulatory policies and recent changes in regulatory structure.

The report “Pakistan Cards & Payments: Opportunities and Risks to 2023” provides -

• Current and forecast values for each market in the Pakistani cards and payments industry, including debit and credit cards
• Detailed insights into payment instruments including cash, direct debits, cards, and cheques. It also, includes an overview of the country's key alternative payment instruments
• E-commerce market analysis
• Analysis of various market drivers and regulations governing the Pakistani cards and payments industry
• Detailed analysis of strategies adopted by banks and other institutions to market debit and credit cards

The report “Pakistan Cards & Payments: Opportunities and Risks to 2023” enables the user to -

• Make strategic business decisions, using top-level historic and forecast market data, related to the Pakistani cards and payments industry and each market within it
• Understand the key market trends and growth opportunities in the Pakistani cards and payments industry
• Assess the competitive dynamics in the Pakistani cards and payments industry
• Gain insights into marketing strategies used for various card types in Pakistan
• Gain insights into key regulations governing the Pakistani cards and payments industry

Companies Mentioned: HBL, UBL, MCB Bank, Askari Bank, Allied Bank, Bank Alfalah, Faysal Bank, Standard Charted, Visa, Mastercard, UnionPay, American Express

Scope

• The State Bank of Pakistan (SBP) has undertaken various initiatives to boost electronic payments. In September 2018 it passed regulation preventing banks from charging transaction fees (including interchange fees and merchant discount rates) on payments made to government bodies using electronic payment methods such as payment cards and digital wallets. In March 2018, the SBP partnered with the Federal Board of Revenue (FBR) to launch an online tax collection system. The system allows taxpayers to pay their FBR taxes via internet banking or at ATMs. And in June 2016, the SBP issued a guideline making it mandatory for all card service providers to implement EMV standards on payment cards by June 30, 2018. The deadline was later extended to December 31, 2019.
• In support of the government’s financial inclusion initiatives, domestic payment scheme PayPak was launched by 1LINK in April 2016. The aim is to provide low-cost payment services for unbanked individuals. Over 30 banks now offer PayPak debit cards. To enable overseas usage and acceptance of PayPak cards, 1LINK partnered with JCB in April 2018, allowing member banks to issue PayPak-JCB co-badged cards. The company also partnered with Allied Bank in August 2018 to launch PayPak-UnionPay International co-badged debit cards.
• To drive Islamic banking in the country, in July 2017 the SBP issued guidelines on the conversion of conventional banks into Islamic banks. It has also conducted various events to increase awareness of Islamic banking. These initiatives help promote banking services among Pakistanis, many of whom favor Islamic banking for religious reasons. The number of Islamic branches stood at 2,913 in June 2019, up from 1,651 in June 2015.

Reasons to Buy

• Make strategic business decisions, using top-level historic and forecast market data, related to the Pakistani cards and payments industry and each market within it.
• Understand the key market trends and growth opportunities in the Pakistani cards and payments industry.
• Assess the competitive dynamics in the Pakistani cards and payments industry.
• Gain insights into marketing strategies used for various card types in Pakistan.
• Gain insights into key regulations governing the Pakistani cards and payments industry.