COVID-19 pandemic has altered global perceptions about managing unforeseen situations and has impacted healthcare practices, economic assumptions as well as the general outlook on change in consumer behaviour during this crisis. Financial, medical and social experts are unanimous in calling that the worst of the Coronavirus is still not behind us but thankfully, there is a lot that offers hope. Pakistan is no stranger to the prevalent crisis. With approx. 70,000 reported cases of COVID-19 so far, the country is witnessing lockdowns across different all provinces.
Although this has given rise to a host of challenges, it has also brought to light several economic prospects at the same time. The use of digital financial services is the chief aspect facilitating government operations, businesses and their financial supply chains as well as individuals in carrying out their day to day activities. Digital payments are limiting in-person transactions and ensuring consumers can buy essentials from the comfort of their homes. Ramped up e-commerce initiatives are also helping small businesses keep revenue flowing during an uncertain time.
Easypaisa, the most widely used service has also seen a jump in users, both from customers who are new and those who are returning to use the app again after having subscribed earlier. There has been a 35% increase in new activations whereas old returning customers have gone up by 25%.
Figures available from Easypaisa, has shown that there has been a 17% increase in the number of daily transactions through the app after the COVID-19 crisis emerged and preventive measures including lockdowns were initiated across the country. Similarly, Daraz, a leading e-Commerce platform in the country, witnessed an 8.2x increase in use of e-wallets by consumers on average. Mobile wallets and banks have integrated online shopping services within their apps, allowing users to ensure completely contactless experiences when shopping for necessities during COVID-19. They have also enhanced their features including purchase of airtime, data bundle, bill and fee payments, money transfer, QR payments, salary disbursements, zakat payments etc.
The Pakistani economy is heavily reliant on cash with 80% of all transactions being done by hard currency and this is why various stakeholders in the economy understood that a significant shift in consumer behaviour was needed to ensure that the financial system remains functional.
The State Bank instructed banks and micro-finance institutions to waive all transaction fees from digital payments as soon as the lockdown was announced. Banks complied and even went the extra mile by adding new payment features to their applications to provide convenience for consumers. Transparency and accountability are harder to achieve with cash payments because they are anonymous and difficult to trace.
Digital payments increase accountability and tracking, lessening the risk of corruption and theft. There is a long way to go still in order to move towards a completely digital economy and truly reap its benefits. A three-tiered approach’ is needed – firstly, the use of digital wallets is encouraged for each and every Pakistani enabling them with a second alternative to cash.
Secondly, the number of retailers and SMEs accepting digital payments has to be expanded, enabling the masses with convenient and safe options. Lastly, steps are needed to discourage cash-based transactions and incentivize digital payments by providing discounts or cashbacks on local products. Together, these efforts can lead to a gradual but decisive shift towards a stable, transparent and robust financial ecosystem in Pakistan.