State Bank partners with Karandaaz to implement micropayment gateway

KARACHI: The State Bank of Pakistan (SBP) signed a partnership agreement with Karandaaz for the implementation of micropayment gateway, a part of the National Financial Inclusion Strategy, a statement said on Tuesday.

Under this agreement, Karandaaz with the funding from Bill and Melinda Gates Foundation (BMGF) will support the central bank put in place this gateway, a digital payment platform based on modern technology, making real-time interoperability of smaller digital transfers possible.

Ali Sarfraz, CEO of Karandaaz, and Syed Sohail Javvad, head of payment systems department of SBP, signed the agreement. Queen Maxima of The Netherlands; Hammad Azhar, minister for economic affairs division; and Dr Reza Baqir, governor of the State Bank witnessed the signing of the agreement.

Queen Maxima, visiting Pakistan in her capacity as the UN Secretary-General's Special Advocate for Inclusive Finance for Development (UNSGSA), said that it was encouraging that the State Bank of Pakistan was committed to set up the micropayment platform and that all providers and government entities will be required to join in 2020.

“The next steps in designing the appropriate governance structure, scheme rules, initial use cases, and pricing will be critical for the platforms to succeed and to have an impact. I encourage you all to engage with the industry’s working group led by the State Bank and also to discuss and provide your inputs on the design,” she said.

Dr Shamshad Akhtar, chairperson of Karandaaz, said that in Pakistan, around 50 percent of the adult population, mostly women, lack access to formal financial services.

Most households resort to risky, inefficient, and expensive informal channels to fulfill their financial needs, she said.

“Immediate clearance of transactions will keep the system-cost low and providers would contribute data to a shared service, ensuring all users and transactions are legitimate and risk-free,” Akhtar said, adding that millions of people in Pakistan are not included in the formal economy and; thus, miss out on the many advantages of formal financial systems.

“With a high mobile phone penetration, Pakistan is well positioned to expand and accelerate digital financial systems and this micropayment gateway will go a long way in spurring financial inclusion in the country,” she added.