Raast is Pakistan’s first instant payment system that will enable end-to-end digital payments among individuals, businesses, and government entities, instantaneously.
This state-of-the-art payment system will be used to settle small-value retail payments in real-time while at the same time provide cheap, and universal access to all players in the financial industry, including banks and fin-techs.
Pakistan has had low electronic transactions for several reasons, including low banking penetration, lack of trust, and awareness of digital payment methods, limited interoperability, difficult accessibility, and high cost of transactions.
The Real-Time Gross Settlement System (RTGS) of Pakistan provides instant payment settlements for large value and corporate transactions only. Raast will facilitate retail payment settlements with greater efficiency.
Digital payments only account for 0.2 percent of Pakistan’s approximately 100 billion transactions today, whereas the share of digital transactions in peer countries ranges from 1.5 percent to 7 percent. This can be attributed to the challenges within the payment ecosystem.
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Features of Raast
Raast will provide instant payments services, as it will facilitate near real-time digital payments across individuals, merchants, businesses, and government entities.
It will charge low-to-no transaction costs for end-users. Designed to operate at a cost-recovery model, Raast will make digital payments affordable to end-users of all socio-economic backgrounds.
Raast will be functional on sector-wide interoperability. It will allow all financial institutions to seamlessly connect via a single link to the central infrastructure, making digital payments accessible across any channel to customers of any financial institution.
It will offer customer-centric innovative products and services. Raast will be built on cutting-edge technological standards, allowing financial institutions to develop innovative and user-friendly digital payment products and services (e.g., payment through phone number/email).
Raast will ensure reliability and enhanced security. It will introduce secure payment types, ensure that each transaction is authorized by the payer, and offer enhanced data protection and fraud detection services.
DFSs are extended by Financial Institutions including:
- Banks
There are in total 44 banks, of which there are with a network spanning 16,121 branches. These institutions are licensed to provide a full range of financial services to Pakistanis.
- PSOs/ PSPs
Licensed under the Rules for Payment System Operator/ Payment Services Provider (PSO & PSP) 2014, these institutions are licensed to provide the following services to Pakistanis.
- An electronic platform for clearing, processing, routing, and switching of electronic transactions.
- It can make agreements with banks, FIs, and other PSOs and PSPs merchants, e-commerce service providers, and any other company for the provision of services mandated to the PSO and PSP under the said rules.
3. EMIs
The Electronic Money Institutions (EMIs) offer innovative, user-friendly, and cost-effective low-value digital payment instruments like wallets, prepaid cards, and contactless payment instruments. E-money has played a crucial role in digitizing different types of payments in various countries.
The EMIs in Pakistan will offer interoperable and secure digital payment products and services to end-users.
Under the regulations, prospective EMI applicants are granted EMI license in three stages viz In-Principle Approval, Approval for Commencement of Pilot Operations, and the Final Approval, i.e., License.
4. Government Entities
Government Entities play a significant role in extending Digital Financial Services to Pakistanis. RaastPay enables Dividend Payments, Salary Disbursements, and other Government to Person (G2P) transfers.
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Payment Infrastructure in Pakistan
Raast project is an on-going collaboration between Karandaaz and the State Bank of Pakistan (SBP). The project aims to improve the payment infrastructure, with the objectives of further developing digital financial services, reducing reliance on cash, and driving financial inclusion in Pakistan. It will become a core component of Pakistan’s payment infrastructure that will enable individuals, businesses, and government entities to make any payment digitally in a simple, fast, low-cost, and secure manner.
Besides Raast, various payment systems are being operational in Pakistan under the supervision of the State Bank of Pakistan with their designated scope of works, including Large Value Payment Systems (LVPS), Pakistan Real-time Interbank Settlement Mechanism (PRISM), and Retail Payment Systems.
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