Digital finance.

ACCORDING to the World Bank, in 2017, only 18 per cent of Pakistanis had an account with a financial institution. Access to financial services - storing money securely, accessing competitive loans to smooth consumption or purchase assets, availing insurance to weather financial shocks, sending money to relatives with minimal fees, making and receiving payments quickly and affordably - is increasingly recognised as a basic need in a modern economy.

For the poor, financial inclusion can build resilience, provide a safety net, and make daily financial transactions more convenient. For a daily wager, for example, sacrificing a day to visit a BISP centre or to pay utility bills may mean a significant loss in wages. The majority of Pakistanis lack access to payments services that would allow them to conduct such transactions efficiently and at a low cost.

This is where many hope Raast will make a difference. Prior to Raast, Pakistan's payments infrastructure constituted PRISM (for large value transfers) and 1Link (owned by a consortium of private-sector financial institutions to enable connectivity between them). Neither of these catered to the daily transactions ordinary citizens make. For example, using IBFT to send money to a relative through a bank account can cost as much as Rs150 per transaction (the State Bank has temporarily ceased these charges during the pandemic). For many, this is unaffordable and renders small transactions (such as sending a small sum of Rs500) untenable.

Raast offers opportunities for inclusion, but is not without risk.

While such problems have been solved piecemeal (for example, through mobile money providers), a single unifying payments infrastructure will enable speedy delivery of new use cases - facilitating different types of transactions - and entry of new international and local financial services providers into the Pakistani market as barriers to entry are lowered - new entrants can now link up to an existing, low-cost payments infrastructure.

In technical terms, the benefits of a system such as Raast stem from 'interoperability'. Interoperability enables many of the services we use in our daily lives. For example, Gmail users can send emails to Hotmail and Yahoo users; Ufone users can make calls to Jazz and Telenor users. This ability of different service providers to enable transactions with each other greatly increases convenience and uptake.

Interoperability works similarly in the financial sector. If...