Watching too much news is a sure-shot subscription for high blood pressure, both anecdotally and scientifically. But what about regularly sifting through tonnes of data on Pakistan? That ought to be at least equally bad for physical and mental health, if not more. Just choose your topic of interest and feel the gloom shadowing you in real-time. Economy? Makes you want to run away. Health? Frightening. Gender? Gut-wrenching.

Amidst all this, there is one area where looking at data actually instils some sense of hope: the Payment Systems Review. The State Bank of Pakistan (SBP) published the numbers for January-March on Friday, showing a steep uptake of digital payments in the country. Let’s try to unpack the most important trends from the latest report.

Expectedly, mobile banking was the largest digital channel and furthered its dominance, processing 301.5 million transactions worth Rs12.96 trillion between January and March. This came on the back of 67.8 per cent growth in throughput and 91pc in volume compared to the same period last year — again well ahead of others.

Though a distant second, internet banking also witnessed healthy uptake as throughput surged 56.2pc year-on-year to Rs6.5tr while number of transactions was up 43.9pc to 58.7m in Q3FY24.

Digital wallets truly excelled at onboarding freelancers, doubling to 184,516 by March — a phenomenal increase of 110,243, or 148pc, in just a single quarter

On the other hand, there are very early signs that point-of-sale (POS) growth may be tapering off as throughput rose by 39pc in Q3FY24, making it the first instance of less than 40pc increase in 12 quarters. However, the value still reached almost Rs1.4tr as volumes and closed at 251.3m.

According to the SBP, the number of terminals edged lower to 120,641 in Q3FY24, from 121,789 in the previous quarter due to the retrieval of inactive machines by two acquiring banks. What was more interesting is that for the first time, the regulator shed some light on the actual supply side, noting that the total POS-enabled merchants in the country were 93,536.

Meanwhile, e-commerce still awaits its inflection point, processing just 9.6m transactions in Q3FY24. Though this translates into a year-on-year of 48.4pc, the jump comes off an unusually low base of 6.4m during Jan-March 2023 and the volumes are actually lower than the preceding two quarters still. Thanks to inflation, throughput has managed to post consistent growth and reached Rs52.1bn, compared to Rs36.6bn in the same period of last year.

Similarly, there was nothing exceptional on the supply side as banks maintained their pace, adding 306 merchants, which took the total number to 7,936.

In contrast, electronic money institutions (EMIs) barely did any acquiring activity as their registered merchants edged up a grand total of three to 4,957. Since the second quarter of 2022, this figure has increased by only six and highlights how e-wallets remain towards the consumer segment.

In fact, the data shows good progress there: EMIs issued 454,785 new wallets during the quarter, which took their total customers to almost 3.2m. Combined, they made 22.9m transactions worth Rs62.1bn, predominantly for fund transfers. Albeit off a very low base, this represents growth of 136pc and 191pc for volume and throughput, respectively.

Moreover, digital wallets truly excelled at onboarding freelancers, which more than doubled to 184,516 by March — a phenomenal increase of 110,243, or 148pc, in just a single quarter. This is a direct result of the State Bank’s amendments to the EMI rules in June 2023, allowing new products and services to licenced entities while relaxing the limits on amounts.

A regulatory intervention that is bearing fruit is Raast, which now has 36m registered IDs

Another area where regulatory intervention is bearing fruit is Raast, which now has 36m registered IDs. Through its rails, 140.3m transactions worth more than Rs3.4tr were processed during the quarter — surging by 240pc and 241pc compared to the same period last year, respectively. However, almost all the value and volume remain concentrated towards the peer-to-peer segment, leaving much to be desired regarding the bulk payments module.

Within the fintech community, all eyes are on the person-to-merchant (P2M) module. Though new, it represents a major upgrade not just in technology but also in potential reach by enabling physical and online businesses to accept payments through various modes, including QR codes and request-to-pay.

Currently, we are at the stage where industry players, from banks and wallets to intermediaries, are either testing or have just launched their products. Most recently, 1LINK introduced 1GO, a payments suite built on Raast rails and is leveraging its network of 13 aggregators for merchant acquisition. Given that the tech and the target segments are both new, it may take some time before we begin to see results.

In the long-term, the success of Raast P2M hinges on factors that probably go beyond the SBP’s mandate. Any broad-based merchant digitisation drive needs the active involvement of the federal and provincial revenue authorities, as well as some coordination among them. More importantly, it requires a government that is humble enough to realise the lack of trust people have in the system.

The writer is the co-founder of Data Darbar

Published in Dawn, The Business and Finance Weekly, July 22nd, 2024