Pakistan is Getting A Digital Payment Index Soon

A Digital Payment Index (DPI) has been planned at a national level to put a navigator in place that tracks and assesses the progress made by the country in terms of payment digitization.

The index highlights the effectiveness and penetration of digital payment infrastructure, the use of digital channels, and the awareness of digital payment tools among consumers.

Developing a payment digitization index for Pakistan will serve various purposes in line with the country’s digital transformation agenda. It will provide a comprehensive framework to measure and understand the extent of digital payment adoption across different payment channels, sectors, regions, and demographics. Further, it will help identify gaps and opportunities in the current digital payment infrastructure, facilitating targeted policy interventions and investments.

Globally, several countries have designed indices to map the digital payment infrastructure and holistically measure payment digitization. Another key example is the Mastercard Digital Payment Index, which was created to provide a holistic view of the digitalization of consumer payments in seven Central and Eastern European Countries, including Hungary, Romania, Austria, Bulgaria, Greece, Serbia, and Croatia.

The DPI includes indicators such as account penetration, card penetration, instant payment enablement, QR code payment enablement, contactless POS penetration, and account-based mobile payment enablement, among others. Also, an indicator assesses awareness, convenience, and general digital payment knowledge among consumers. It also gauges cashless payment usage and payment solution adoption into 18 different KPIs.

For instance, card usage penetration, POS adoption, ATM adoption, QR code payment adoption, and account-based mobile payment adoption. The initiative of a national Digital Payment Index (DPI) in Pakistan will be developed under Karandaaz Pakistan, which also collaborated with the State Bank of Pakistan (SBP) to set up RAAST Payment system previously.

Objectives of the Digital Payment Index

1. Create a robust and reliable digital payment index that reflects the adoption, usage, and development of digital payment systems in Pakistan.
2. Support the local payments ecosystem with actionable insights, combining scattered data into a structured, standardized, and easy-to-track measure.
3. Provide an indicator to track the development and adoption of digital payments, focusing on the frequency and volume of different types of digital transactions.
4. Allow various stakeholders to study developments in the local infrastructure and assess the acceptance of digital payments over a defined period.
5. Understand consumers’ preferences and pain points by delivering insights on the payment acceptance infrastructure, consumers’ access to existing and new payment methods, and their perceived convenience and security.
6. Define and standardize key metrics and indicators that will be used to measure the performance and growth of digital payments across different sectors, regions, and demographics within Pakistan.
7. Establish a systematic approach for collecting, integrating, and analyzing data from various sources to ensure the index is comprehensive, accurate, and up-to-date.
8. Position the index to allow for benchmarking Pakistan’s digital payment progress against other countries, identifying best practices and areas for improvement.

The planned index will be updated periodically as per information provided by the State Bank of Pakistan and Karandaaz Pakistan. At present, Karandaaz Pakistan has sought proposals for designing a comprehensive payment digitization index for Pakistan, combining scattered market data from publicly available sources into a standard measurement tool that effectively captures changing consumer behavior.

Constructing a robust and informative index can help policymakers, regulators, financial institutions, private sector players and other stakeholders make informed data-driven decisions, formulate guided interventions, and monitor such efforts’ impact over time, fostering a vibrant digital economy.

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