Updated: Mar 21, 2022
The State Bank of Pakistan (SBP) has directed banks and other financial institutions to increase the transaction limit for Raast person-to-person (P2P) payment service. The SBP has ordered banks, microfinance banks and EMIs to further facilitate the users of Raast by increasing the limit and the new transaction limit shall be applicable by April 1, 2022.
In compliance with the relevant anti-money laundering and counter financing of terrorism, banks, microfinance banks and EMIs can set limits in their systems based on the risk profile of their customers. The aggregate transaction limit for Raast payments and available limit for customers will be available on their mobile application and banking portals and shall not be less than interbank funds transfer (IBFT).
The SBP has also reiterated that banks put in place strict internal procedures and other risk-mitigating measures to avoid the misuse of the transaction limits and ensure the safety of the Raast System at their end.
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Updated: Feb 16, 2022
Prime Minister Imran Khan has recently launched the person-to-person instant payment system “Raast” to provide facilitation to the common man. The system has been developed in collaboration with the State Bank of Pakistan (SBP) through which everyone will be able to make financial transactions via cell phone.
The greater impact of Raast will be on the saving rates and tax to GDP ratio which are the determinants of the forward-moving economy. This instant transactions system will revolutionize digital banking and further help in promoting e-commerce and IT exports of the country, as remarked by Finance Minister Shaukat Tarin.
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Pakistan has launched ‘Raast,’ the country’s first instant digital payment system. This is the first time the Pakistani government has launched an initiative aimed at boosting government revenue in a country where keeping track of economic transactions is a challenge, owing to high dependency on cash.
Prime Minister Imran Khan launched the initiative during a press conference and termed the move a “big step” towards realising Pakistan’s full potential by way of taking complete advantage of the 220 million population. Addressing the ceremony, Khan said only 2 million people file their taxes, and so the country’s cash economy remains largely untaxed, all of which can now be changed through this digital payment system. He added that the digital payment system will create a gradual shift away from the cash economy to a point where the government can fully take advantage of the country’s large population.
What Will Digital Payment System ‘Raast’ Do For Cashless Economy?
The new instant digital payment system is called ‘Raast’—Urdu for direct or straight—and, as the name suggests, it will provide a direct way towards bringing more Pakistanis into the digital economy net. The project was announced under Digital Pakistan Vision and has been developed through multi-year collaboration between the State Bank of Pakistan and the Bill & Melinda Gates Foundation, with support from the World Bank, Britain and the United Nations.
The State Bank of Pakistan (SBP) says the framework will be rolled out in three phases till early 2022. Prior to the launch, the SBP announced that in the first step, instant credit of dividends from listed companies to shareholders will be initiated. Followed by the digitization of the payments made to government employees in wages and pension. In a statement, Bill Gates said, “I hope that in years to come we will look back and see this new digital public good as an important contribution to our shared goal of giving all people the tools they need to lift themselves out of poverty.”
The state-of-the-art faster payment system can be used to settle small-value retail payments in real-time while also providing cheap and universal access to all players in the financial industry, including banks and fintechs. This will serve as a direct connection between users located anywhere.
While various private-sector digital cash transfer systems exist in the country such as Jazz Cash, Zong Easy Paisa, etc, this is the first system that links government entities and financial institutions. Khan added the automated collection of taxes on transactions and tightened rules on banking will help shift the country away from a cash-based economy and tackle corruption more efficiently, under an extensive policy framework of Digital Pakistan Vision 2019.
Apart from this, this move is aimed to boost the formal economy, increase the financial inclusion of women, and eradicate poverty from the country. This platform will increase the outreach of Ehsaas Programme and Benazir Income Support Program to the economically-isolated classes, especially women. Through this, women in rural areas can open their bank accounts and receive any cash payments from the government directly to improve their livelihoods.
As per a new MoU between the central bank and Controller General of Accounts (CGAP), the government will now be disbursing salaries and pensions of a group of Federal Government employees through Raast. Also, as per government statistics, the volume of mobile banking transactions has reached PKR 1.12 trillion, witnessing an increase of 147%, during the second quarter of 2020-2021. Moreover, registered phone users have also increased by 5% during this period.
Salient Features of SBP’s Raast Digital Payment App
Perfectly streamlined with the Digital Pakistan vision, RAAST is SBP’s newly introduced online payment system with all the cutting-edge features, enabling the masses to conveniently and affordably use the latest digital payment methods.
According to the State Bank’s official website, the following are the salient features of the Raast digital payment application that its users should be aware of.
- Instant and Hassle-free Payments: Make real-time digital payments across the country. Payments can be made between individuals, merchants, commercial entities, and government institutions.
- Little-to-no Transaction Costs for the Common Man: Cost-effectiveness was one of the key ideas behind the introduction of RAAST. The model of this digital payment system is designed in a way that it allows end-users to make digital payments with little or no cost at all.
- Seamless Connectivity: RAAST is a bridge connecting many different financial institutions across the country via a single and reliable link. The centrally connected infrastructure of the system makes digital payments accessible to everyone, which also includes customers of any financial institution
- Products/services Backed By a Customer-centric Approach: Raast has been built on cutting-edge technological standards, allowing the banking sector and different financial institutions to introduce products and services centered around user-friendly online payment methods. For example, now you can use your phone number as your RAAST ID to make online payments.
- Reliable and Secure: Your online payments and transactions will absolutely be safe on SBP’s RAAST platform. All the financial and transaction activities on the portal are authorized by the payer and verified by the system to offer enhanced data protection as well as the detection of any fraudulent activity.
Banks to Offer Free Funds Transfer Facility to Their Customers Via RAAST
At the request of the State Bank of Pakistan (SBP), some selected commercial banks in the country will enable the Person-to-Person (P2P) funds transfer facility, allowing their customers to instantly transfer funds using the Raast App. These digital fund transfer services will be free of cost.
Digital Pakistan Vision – What To Expect Next
In 2019, Pakistan launched its Digital Pakistan Vision with an aim of enhancing connectivity, improving digital infrastructure, increasing investment in digital skills, promoting innovation, and technological entrepreneurship. It is created to target five key areas: Access and Connectivity, Digital Infrastructure, e-Governance and Innovation and Entrepreneurship.
The first area, Access and Connectivity is aimed at creating a broader digital space for including more people; Digital Infrastructure provides the framework to govern how the digital space is regulated to provide for smoothing functioning. This is especially important these days as the untapped cyberspace creates the need for better governance practices. Meanwhile, e-Governance will ensure the interlinking of government departments and safe and more effective avenues of data sharing. As tapping the digital space remains an oddity, Digital Skills and Training will provide the necessary knowledge and skills to work in this environment effectively. Lastly, Innovation and Entrepreneurship will allow for an environment where startups can be introduced and sustained.
It is through newer means such as Roshan Digital Accounts that Pakistan has also seen a sharp increase in remittances by overseas Pakistanis. The latest data from SBP shows remittances from overseas Pakistanis during December 2020 have risen by 16.2 percent year-on-year to $2.436 billion, compared to $2.097 billion in December 2019. This is a persistent revenue of over $2 billion for the seventh consecutive month. All of this was possible under the Digital Pakistan Vision to provide formal channels of doing transactions.
Digital Pakistan Vision is the driving force behind the technological revolution of Pakistan’s economy. It is to provide the economy with the tools needed to move ahead, to gain a competitive edge in this modern era, and provide greater accessibility to the most vulnerable classes in society. Greater digitisation translates into greater accountability and streamlining of operations, which is what Pakistan wants to achieve.
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