Govt Needs to Support Digital Banking to Fight Corruption & Serve the Unbanked

The digitization of services through mobile technology continues to grow exponentially around the globe. Mobile cash apps have emerged over the past few years, particularly in the emerging markets and play a big part in laying the foundation of financial inclusivity.

Countries like China and South Korea adopted this cashless mode of payments years ago and consider it challenging to use any other alternative. Financial transactions through the mobile phones allows countries like Pakistan wider consumer reach and transparency of large and small transactions that cut corruption and undocumented facilitation fee.

The government plays a critical role in establishing an ecosystem necessary for the ICT and technology industry to thrive.

Pakistan has seen a fast-paced growth in tech over the last decade or so largely because of a growing middle class and an innovative telecommunications sector. The provision of services by telecom companies has been visibly beneficial for the economy and social development.

The Benefits of Mobile Cash Apps & Payment Gateways

Mobile cash apps launched a decade ago, now serving 32 million people, allowing Pakistan to be a part of the financial inclusion trajectory globally. By introducing banking services to the vast majority of the unbanked population through mobile payments, the telecom sector has taken the opportunity to the people in remote and underserved areas as well. This has a huge impact on those on the margins of society like women and pensioners.

Additionally, person-to-government (P2G) services were launched to advance financial inclusion efforts at a larger scale. This inclusion propelled Pakistan into modernizing its economy via digitally enhanced utility bill payments and other convenience fees.

Passport Fee Collection With Mobile Payments

In 2016, the Directorate General of Immigration (DGI&P) and Passports and the National Bank of Pakistan (NBP) decided to implement this convenience into the passport renewal fee process. The agreement for this passport fee services was signed between DGI&P and NBP at NADRA HQ in the presence of the then interior minister.

The launch of passport fees through mobile financial service players i.e. Mobicash, Easypaisa and UPaisa allowed for expeditious fee collection. Mobicash was the chosen company to implement the pilot project in Islamabad and Rawalpindi. The successful pilot in service of the citizens and government allowed for the nationwide expansion, where customers paid their passport fees by visiting the nearest mobile money retailer or by using their mobile money accounts.

This helped citizens a great deal by cutting time at long queues at NBP branches. It also put an end to exploitation by agent mafias applying on behalf of citizens outside passport offices. Often, this mafia was exploitative and fraudulent.

This was the first P2G service of its kind available nationwide and aided in putting an end to corruption both within the government and the rackets that operated privately. With 20,000 to 24,000 passports being processed in a month, the digital service quickly became user heavy in various cities. This led to an increased number of empowered mobile money users and encouraged similar public-private partnerships for other government services.

An Abrupt Closure of Services

However, at the start of 2019, this service was abruptly brought to a standstill. The necessary protocols remained unarticulated by the government and rolled back the impact the service aimed to create. The opportunity cost to both the government and society is huge.

The Impact

This has definitely shaken the confidence of mobile banking institutions working to forge similar partnerships to facilitate P2G payments. Currently, there are other mandates like KPK services commission, Islamabad Traffic Police and Karachi Police Department, where JazzCash and Easypaisa are following a similar arrangement, but even these services might become a target of regulatory inefficiencies.

This is an indicator of why Pakistan’s ecosystem in technology is immature. Pakistan’s score on the World Economic Forum’s Networked and Technology Readiness Index is at 110th position. Comparatively, Sri Lanka is at 63 and China is at 59 on the index.

The failure of the policy makers and government officials to realize the benefits that come with digital solutions can limit not just the high grossing technology industry but also dwarf other industries that digitalization rests on – such as ride sharing, tourism, health and agriculture. Online services not only simplify the process for consumers but also for those in positions of power.

Online payments can speed tax collection and lead to precision policymaking. Illustratively, NADRA’s online identification system is smoother, efficient and has allowed for documentation of several citizens outside the net of government care and service.

With an outstanding estimate of 100 million unbanked people making up the country, it is the telecom industry and mobile cash apps that have marched the country ahead in financial inclusion. Such digital tools have proven to empower those living in poverty and illiteracy.

A new digital economy is not a challenging feat, all it requires is removal of hurdles and inconsistent technology policy.

    • They acquired easypaisa. They wouldn’t have done that if they wanted to launch their own brand.

      Easypaisa has been around for ages and has totally failed to capture the market. Banks maintain an iron grip on it. Central bank is also not willing to offend the banks. Why in other countries they have unified money transfer systems. The EU is even going so far as mandating open APIs. In Pakistan it’s all walled gardens.

      • We require international payment method.Many website now accept AliPay for payment how easypaisa is going to solve this problem? All other in Pakistan are doing copycat of easypaisa and jazzcash like simsim,nayapay.We want something new which can be used for international payment not old stuff.

  • Government doesn’t want to see ICT adoption. It fears the loss of control if more people use technology to get information and fulfill their needs. Why if they become computer literate they might be exposed to the opinions of undesirable foreigners! How will the establishment maintain its control over our fates if that happens? Their message will lose its effectiveness. People might even question why they consume so much of our resources.

    Even propakistani doesn’t care enough about ICT. You guys have yet to do a detailed write up about the newly announced ecommerce policy. If you had looked at it you would have noticed that restrictions on online businesses are even greater than those for offline ones. Far from promoting ICT the government is doing everything it can to stop the adoption of technology.

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