Last month, GSMA Intelligence released a report focused on the foundational factors to support the growth and development of digital commerce in Pakistan. I’d like to share some highlights from that report, because the lessons and insights are critical for all mobile money providers and policymakers looking to build a robust digital ecosystem. The report focuses on the intersection between financial inclusion, mobile money and digital commerce, leveraging the context of Pakistan to showcase the opportunity and the challenges.

Digital commerce extends the reach of addressable market of goods and services by digitising access to marketplaces and digitising payments (both proximity and remote payments). Pakistan is a typical example of a market where cash is used for most of the payments. In fact, more than 85% of all transactions in Pakistan are completed in cash. This is due, at least in part, to a lack of access to banking infrastructure.

To address this, the mobile money providers, or branchless banking service providers as they are known in Pakistan, have heavily invested in the opportunity to extend the reach of financial services. While market uptake has largely been focused on the over-the-counter (OTC) model, providers have now shifted priorities to drive uptake in mobile accounts. Within this focus on accounts, digital commerce could become a powerful mechanism to keep the account usage high.

To build a digital commerce ecosystem, all stakeholders in the ecosystem have a role to play. The challenges that face Pakistan are not dissimilar to other markets. These include socio-political barriers such as weak legal and regulatory frameworks, digital illiteracy, and a lack of awareness of what digital commerce is and how to access it. Success requires collaboration between all stakeholders involved, including government and regulators, mobile operators, financial institutions and fintech companies. Further analysis and recommendations are explained in-depth in the report, with an overview of key recommendations outlined below.

Recommendations for:

Digital access, payments and service providers

• Increase the number of active branchless banking account users by extending the service to the existing GSM subscriber base.
• Increase awareness of the benefits of branchless banking through targeted campaigns to increase account activity.
• Promote collaboration with industry players to leverage each other’s strengths and offer attractive products and services.
• Increase digital literacy among mobile users.

Governments, regulators and policymakers

• Policymakers in Pakistan, and elsewhere in the region, have a huge role to play in defining a clear policy vision around digital commerce.
• Promote account adoption and trust through G2P and P2G. A government is typically the biggest employer, and consequently, the largest disburser of pensions and social benefit payments. In addition to disbursements, governments also collect payments from the citizens for services and taxes. By digitising these payments, trust in digital payments would increase and the adoption of digital accounts would grow.
• Increase customer and investor trust in online services through a comprehensive legal framework that regulates e-commerce locally and is also harmonised with the regional markets
• Carefully consider the impact of mobile or financial services taxes on affordability for consumers and business viability for providers