27 Jun 2023
When you look at Pakistan's remittance landscape, one factor stands out: the shift towards digital and mobile-based remittances. But what's the reason for this change? And what does this mean for the future? Over 9 million Pakistanis live overseas, most of whom earn and send money to Pakistan that adds to the country’s economic growth besides supporting households. Digital remittance channels can make significant impacts in this regard, which this article will highlight. Keep reading to learn more.
Digital and mobile-based remittances are forms of money transfers that leverage technology to send funds across geographical distances.
Digital remittances involve the use of online platforms or applications to transfer money. These platforms can be accessed via a computer or smartphone, and they allow users to send money across borders without the need for traditional banking infrastructures.
On the other hand, mobile-based remittances specifically refer to the use of mobile technology in sending money. These are especially significant in areas where access to traditional banking services is limited, but mobile phone usage is widespread.
Both digital and mobile-based remittances provide a fast, secure, and often more affordable way of sending money, making them an attractive option for individuals working abroad who want to send money home to their families. They have also been instrumental in promoting financial inclusion, reaching populations that have previously been unbanked or underbanked.
Firstly, let’s consider how remittance has traditionally been managed in Pakistan. Prior to the rise of technology, remittances were sent via money orders or bank transfers—a process that was often lengthy and expensive. Yet, this scenario has changed drastically in recent years.
Now most overseas Pakistanis find it convenient and accessible to send money to Pakistan online via a trusted channel like ACE Money Transfer.
The advent of mobile technology has reshaped the remittance landscape, allowing overseas Pakistanis to send money back home in just a few clicks. This transformation didn't happen overnight, but it's definitely been a game-changer.
Digital remittances have seen a phenomenal rise in Pakistan. According to the World Bank, Pakistan is one of the top five remittance-receiving countries globally, with digital and mobile-based remittances contributing significantly.
Amazingly, until 2020, the number of mobile wallet users in Pakistan rose to a massive 175 million, showing the rise of digital platforms in the country. Today, the following mobile apps are available for customers to send and receive money instantly:
It's worth mentioning that overseas Pakistanis play a crucial role in the economy. Their remittances act as a buffer against external shocks, stabilising the economy and providing much-needed foreign exchange.
Every money transfer to Pakistan from abroad adds significant value to the country’s GDP growth while helping millions of families simultaneously. Overseas Pakistanis sent $29.4 billion in FY20, $31.9 billion in FY21, and $31.2 billion in FY22 in remittances, which indicates substantial addition to the country’s foreign reserves.
Digital remittances have been fueled by the fintech revolution. Innovative digital platforms are making remittances faster, cheaper, and more accessible, paving the way for digital money transfers. Today, overseas Pakistanis can instantly transfer funds back home from abroad 24/7 with merely a few taps on their mobile screen using a fintech mobile application.
Having a presence across 100+ countries with over 375,000 payout partner locations worldwide, ACE Money Transfer is one of the top trusted mobile apps enabling as fast as 7 seconds of money transfers to Pakistan. It benefits the customers with competitive exchange rates, the lowest transfer costs, and the most secure and swift transfer mechanism.
Government policies and initiatives have played a significant role in the digital remittance boom. They've implemented regulations that foster a conducive environment for fintech companies, thereby encouraging the digitisation of remittances.
The Pakistan Remittance Initiative (PRI) is a joint initiative of the State Bank of Pakistan, the Ministry of Finance, and the Ministry of Overseas Pakistanis, which aims to foster secure, convenient, economical, and faster remittance inflows through regulated channels to boost the economic growth of the country. Customers can win significant rewards under this initiative when sending money to Pakistan from abroad through only regulated channels.
Looking forward, the trajectory of digital and mobile-based remittances suggests a bright future. With improved financial inclusion, economic stability, and advancements in technology, digital remittances could potentially drive Pakistan's socio-economic growth.
On a societal level, the impact is expected to be substantial. Greater accessibility to digital financial services can lead to a more inclusive economy, benefiting marginalised communities. This could help alleviate poverty and contribute to the overall development of the country.
However, the future will not be without challenges. Issues such as digital literacy, cybersecurity, and network connectivity will need to be addressed. Yet, with the right strategies and regulatory support, these challenges can be mitigated, paving the way for a more digital and financially inclusive Pakistan.
The future of digital and mobile-based remittances in Pakistan seems promising, given the current trends and ongoing initiatives. With the rising adoption of smartphones and internet usage in Pakistan, digital and mobile-based remittances are expected to continue growing. More and more people are getting comfortable with these technologies, increasing the potential user base. These digital platforms can reach areas underserved by traditional banks, improving financial inclusion. As more people gain access to these services, there will be a broader economic impact, potentially helping to alleviate poverty and drive growth.
The rise of digital and mobile-based remittances in Pakistan is a testament to the technological revolution reshaping our world. It's a narrative of change, adaptation, and evolution that brings economic prosperity while bridging the geographical divide. It's a story that continues to unfold, and you can only anticipate what the next chapter holds. Making an online money transfer to Pakistan from overseas comes with several benefits, which indicates an upward trajectory in remittance inflows to the country in the near future.
What are digital and mobile-based remittances?
Digital and mobile-based remittances refer to the transfer of money using digital platforms or mobile technology, respectively.
Why are digital remittances increasing in Pakistan?
The rise in digital remittances is due to factors like the rapid penetration of smartphones, advancements in fintech, supportive government policies, and the need for a more convenient and cheaper way of sending money home by the diaspora.
What role does the government play in promoting digital remittances?
The government fosters a conducive environment for fintech companies by implementing supportive regulations. They have also initiated programs to encourage overseas Pakistanis to use legal channels for remittances.
How do digital remittances impact Pakistan's economy?
Digital remittances act as a major source of foreign exchange, stabilise the economy, and drive socio-economic growth by enhancing financial inclusion.
What is the future of digital remittances in Pakistan?
With the continued advancement in technology, growing smartphone penetration, and supportive government initiatives, the future of digital remittances in Pakistan looks promising.