Saturday June 22, 2024

Going cashless

Carrying cash makes people vulnerable, making them a target for robbers

By Editorial Board
May 28, 2024
A dealer counts banknotes of Rs5000 at a currency market in Pakistan. — AFP/File
A dealer counts banknotes of Rs5000 at a currency market in Pakistan. — AFP/File

Eidul Azha in Pakistan is less than a month away. As the festival draws closer, people head to cattle markets mainly located in the outskirts of the city. This may seem strange to those unfamiliar with Pakistan’s shopping habits, but during the weeks leading up to this Eid, people carry out large transactions (some involving millions) in cash. The transportation of such a big amount of cash makes people vulnerable, making them a target for robbers who carefully station themselves on the roads leading to these cattle markets. Besides this, cash transactions slow down consumption. People who go to the market for pre-shopping ‘surveys’ cannot make on-spot purchases if they find a good animal due to the non-availability of cash. All these issues have been going on for years, and it is good to know that the State Bank of Pakistan (SBP) has decided to facilitate cattle markets across the country for payment through QR codes. This year, authorities are eyeing the cattle market to attract up to Rs550 billion. The SBP talked about this initiative at a recent conference related to mobile commerce.

While this may receive initial hesitation from sellers, it can go a long way in bringing more people to the formal, documented economy. Convenient payment options will also allow more people to make purchases as many people decide against purchasing because they do not want to make multiple trips to the cattle markets. Sellers, especially those who come from rural areas to sell their animals, will not have to worry about how to take the bundles of cash back home without exposing themselves to armed groups, usually stationed near highways to rob people of their valuables. Such financial inclusion will also introduce people to a world of investment opportunities, where they can consider investing in high-yielding bonds or other savings instruments.

Pakistan has delayed its adoption of fintech. Years of an unfavourable security situation in the country have made both financial institutions and customers wary of each other. This trust deficit has, however, left a large segment of people behind the digital age. Technological advancements require Pakistan to confidently tap the potential of the world of fintech. For that, it has to win the trust of the people and convince them to reduce their reliance on cash. It is too soon to say whether this initiative will be successful. We are only a month away from Eid, and changing consumption patterns will require some time. But it is good that Pakistan is finally embracing the digital world. Hopefully, by next year, a large number of sellers and buyers will opt for QR payments and discourage cash transactions.