RAAST Way towards Digital Economy
Pakistan
a country with a population of over 200 million and 60% of them under 30 years
of age is ripe for a digital revolution. Pakistan’s banking sector has been
expanding since its dependence and has played a key role in offering financial
services in the country. The national network of banks with online branches
offers a wide range of services to the public including internet banking and
mobile applications. Pakistan is one of few countries that have its own
domestic payment card scheme Paypak, which has gained a sizeable market share.
From the last few years, the Government and State Bank of Pakistan took several
steps towards financial inclusion and digitization, now about 50% of the
population is financially included and women's share is only 18%. Apart from
this, people like to pay in cash because it is easier, cheaper, and widely
acceptable compare to other modes of payment.
To address these issues
and the rapid modernization of the economies, Pakistan took another step
towards the digitization of the economy by launching an instant payment system
Raast or Direct way. This system enables end-to-end digital payments among individuals,
businesses, and government entities within seconds. On January 11, Prime
Minister Imran khan launched Raast in a ceremony, an initiative part of PM
‘Digital Pakistan Vision’ aimed to build a formal economy including the poor
segments of the society. It was developed through multilayer collaboration
between the State Bank of Pakistan and Bill & Malinda Gates Foundation,
with support from World Bank, the United Kingdom, United Nations, and the
Karandaaz Foundation to move Pakistan from a cash-based to a digital economy.
Why Raast?
Raast is an Urdu word
that has a vital undertone for Pakistan. One, it implies the immediate way for
the most limited distance between two focuses. Second, it relates to the
correct way to pick and that is the message being passed on here.
People ask questions
about the efficacy of Raast, when several private-sector digital payment systems do not require bank accounts then why there is a need to develop a new
system. Therefore, the answer is, Raast would be the first-ever platform to
link government with other financial institutions and make real-time digital
payments with low to no transaction cost. Not only this, it would play a significant role in the digitization of the economy by helping the government
to collect more tax when formal transaction channels are utilized.
Features of Raast
Raast is the instant digital payment system that is developed based on International Standards such
as ISO 20022 and other digital financial inclusion principles. The salient
features of Raast are:
· Real-Time
Payment: Provide near real-time transaction facilities
across individuals, businesses, governments, and other financial institutions.
· Cost-free
transactions: Raast developed to operate at a
cost-recovery model to make digital payments affordable.
· Customer-oriented:
Raast developed on cutting-edge technological standards making digital payments
user-friendly.
· Full
sector interoperability: Raast will allow the financial
institutions to connect perfectly to each other via a single link to the
central infrastructure.
· Secure and Reliable: Raast will introduce a secure and reliable digital payment system and ensure that the payer and the payee authorize each transaction.
How Raast works?
Raast is the backend of
the financial industry, a centralized system that connects all the banks,
non-banks, and other financial institutions via Application Programming
Interface (API) and offers real-time payment settlements. This system has been
deployed at the State Bank of Pakistan deployment of a modern and instant
payment system Data Centre, and will quickly and securely connect the
businesses, government, and other corporate sectors.
Impacts of Raast:
In short, this state-of-the-art payment system will lead Pakistan towards digitization and a cashless formal economic system, which includes all the sectors of society i.e. male and
female population. This system will also help the government to automate the
tax collection system and tighten the rules for all the financial sectors.
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