By Iqra Waheed ISLAMABAD, Feb. 22 (INP-WealthPK): The Raast person-to-person instant digital payment system is going to speed up the economy’s digitisation and people’s financial inclusion. The system has been developed by the State Bank of Pakistan in collaboration with the Bill and Melinda Gates Foundation and Karandaaz, Pakistan. The initiative was launched by Prime Minister Imran Khan, which will bring a revolution in the country’s financial payment ecosystem and further strengthen his vision for digital Pakistan. The first phase of the system was launched in January 2021, which only included the transactions between organisations. The second phase is a person-to-person payment system. Now a person can make transaction through his mobile phone with no charges. Raast has four special points: payments would be done in seconds, there would be no banking fee, a person's mobile phone number would be their Raast ID number and linked to their bank account and it would be available on every channel. In addition, if a customer is not happy with a bank's service, they could de-link it from their Raast ID and add another bank instead. The maximum limit for Raast payment is Rs200,000 per transaction. The Raast system will link the financial institutions, government agencies, microfinance banks, fintax, and commercial banks. This is shown in the diagram below. Raast initiative will increase Pakistan’s financial literacy, which is currently only 13%, and increase the ratio of electronic transactions as well as banking penetration. The initiative will increase the interoperability of the financial institutions and enhance low-cost digital payments. The Raast system is a customised payment system, enabling even the less educated individuals to make digital payments.

Source: SBP

Source: SBP/ResearchWealthPk

Dr. Ahmed Faraz, an associate professor at Pakistan Institute of Development Economics (PIDE), told WealthPK that though there are many other digital payment systems available in Pakistan, Raast is the first one that links the financial institutions and the government entities and ensures instant payments with zero cost. He added, “Our economy is cash-based as other modes of payments are complex, time-taking and bear high costs. These transactions do not have any track record. Moreover, still many overseas Pakistanis send their money back home through informal channels like hawala and hundi, which costs the economy dearly in terms of tax revenue.” He maintained: “The Raast instant digital payment system will ensure documentation of the economy, enabling the government to increase the tax base.” “Raast is a great step that will increase acceptance of digital payments. It will improve the efficiency of digital systems, leading Pakistan towards sustainable growth,” noted Dr. Faraz. However, for the success of the Raast programme, the government should incentivise the banks to speedily adopt this system, stressed the PIDE associate professor.