Pakistan’s Central Bank Worried About Lack of Mobile Payments
While certainly, we’ve seen varying amounts of mobile payments market penetration going on over the last few years—some places it’s huge and other places it’s barely an afterthought—this might be the first time we’ve ever heard a central bank genuinely concerned about mobile payments options, or the lack thereof, in its country. That’s what happened recently as the State Bank of Pakistan—Pakistan’s central bank—announced serious concerns about the lack of electronic payment services in the country.
While this might seem like an odd thing to be concerned about, the word from the central bank is not only concerning, it’s also quantifiable. The bank noted that the country had missed out on as much as $2 billion in payments to communication technology and information services because it didn’t have access to electronic payments. The bank even specifically cited a lack of PayPal access as the reason for missing out on all that cash.
Interestingly, the central bank’s recently-released State of Pakistan Economy Report put information and communications technology (ICT) exports at $1 billion for 2018, but the true value could be as high as $3 billion, with those previously-mentioned payment issues hampering things.
The bank noted that small and medium-sized business exports accounted for a full billion of the total, with another $500 million that would have been included as part of freelancer payments. However, since there’s no PayPal involved, those payments would have been lost. Worse, a lack of “documented payments” is having negative impact on tax collection in Pakistan.
While it’s a bit speculative to suggest that the addition of electronic payment systems would effectively double or even triple Pakistan’s tech export figures, it likely couldn’t hurt. Considering that the entire country’s gross domestic product (GDP) for 2017 was $305 billion, that extra billion would be a substantial boost. Further considering that that extra billion could have been in hand for the sake of electronic payment systems, that’s a further point to consider.
The question Pakistan needs to ask is how it can draw PayPal to its country. Considering that PayPal itself posted revenue of around $15.5 billion, it may not have much interest in going to Pakistan. Still, with sufficient inducements, PayPal may have a reason. And if not PayPal, then certainly a local competitor may have an interest.