Interoperability and the Pathways Towards Inclusive Retail Payments in Pakistan

This report explores how payments interoperability in Pakistan affects financial inclusion. The report assesses the history of ATM interoperability in Pakistan and proposes a managed approach to interoperability. It analyzes how particular measures related to interoperability shape pathways towards desired outcomes. The report states that interoperability helps to achieve greater productive efficiency, convenience for customers, and dynamic efficiency by promoting competition within the financial sector. Achieving greater financial inclusion and reducing use of cash for government payments would help Pakistan move towards the goal of an inclusive cash lite society. Conclusions include:

• Financial sector actors in Pakistan need to clearly understand, define, and measure interoperability to achieve Pakistans financial inclusion goals;
• Much emphasis has been placed on how interoperability may reduce costs of rolling out infrastructure-heavy financial services like ATMs;
• Bigger impact of interoperability is likely to come from the demand side, where it widens options and functionality for payment system users;
• Communicating these benefits to first-time users will require a concerted effort from Pakistans various financial sector actors;
• Planning and mobilizing a concerted effort will demand the skills and perspectives of a new task force.