Youth presents immense growth opportunity for cashless economy

KARACHI: Khalid Elgibali is division president Middle East and North Africa at Mastercard, a leading global payments and technology company. Elgibali is based in United Arab Emirates. He shared his views through an email.  

Q: What are the opportunities and challenges in Pakistan?

A: Nearly two-thirds of Pakistan’s population is young – citizens 24 years old or under. The youth, with their global connectivity and insatiable appetite for innovation and entrepreneurship, presents an unparalleled opportunity for the Pakistani economy to grow by leaps and bounds and minimise the dependence on cash. What’s needed is a solid framework of technology upon which this growth potential can be exploited to its full extent.

Mastercard can help provide this framework through its innovation capabilities and global expertise in payment solutions. And, we are seeing it working already with the global launch of Masterpass QR in Karachi. As the country’s first interoperable digital payment service, Masterpass QR allows banking consumers to use their mobile banking app to pay for in-store, bill payments (invoices) and delivery with one secure account. With time, the service is expected to benefit a large number of existing and potential customers with a fast, secure and convenient payment experience.

Q: How do you see low credit card penetration in the country?

 A: Credit card issuance that started in the early 90s was a very successful business for banks (both foreign and local) in Pakistan, but most of the large issuers faced severe credit losses in the past decade and shifted their focus away from consumer lending.

However, with support of electronic credit information bureau, banks have now started to focus on credit card issuance again and we see the trend changing and the numbers have started to grow as well.

We feel that a bigger priority for the country’s payment sector at this point is the fact that only 23 percent of the population is banked. With the right focus in place (by all the stakeholders) on financial inclusion, banks will eventually be in a much better and secured position to lend to the larger population and we believe that credit cards will be a key personal lending product in the market. The declining trend has already taken a turn and this will only improve over time.

Q: How financial inclusion can be increased?

A: We care deeply about financial inclusion and understand the role it plays in the sustained growth of economies. We believe that strong partnerships between private and public sectors are keys to creating a more inclusive economy. All stakeholders – from governments, merchants and business – have an active role to play in realising a world beyond cash that benefits all citizens through their inclusion in the formal economy.

Q: What are the Mastercard’s plans for Pakistan’s market?

A: We will continue to play our part in developing a leading payments ecosystem in the country through implementation of our various products and interoperable solutions.

Pakistan is looking ahead to a major digital transformation and Mastercard is committed to leveraging the power of its unparalleled payment network and innovation capabilities to design and develop safe and secure solutions that will contribute to this shift, while catering to the needs of the local market and drive the economy’s transition from cash to cashless.

The opening of a dedicated Mastercard office in Karachi comes as part of our commitment to further expanding our footprint in the wider Middle East and Africa region, which we see as a significant growth market for the company’s broader expansion plans. With our formal presence, we look forward to building stronger relationships with our partners, developing the local payments industry and driving cash displacement.

We support an open and competitive payment ecosystem, where Mastercard and PayPak can complement each other in offering a wider range of services that meet the diverse payment and financial inclusion needs in Pakistan. We are also looking at bringing in our other assets like Mastercard processing system where we provide an end-to-end hosting platform for all of the banks’ hosting and switching needs and a range of world-class fraud solutions to ensure complete safety and security for their payment infrastructure.