Poor man’s fintech – Newspaper

With its large cash-based retail economy, coupled with a huge unbanked population, Pakistan offers endless opportunities for investment and growth in the digital banking and payments industry. No wonder a China-backed fintech, OPay, a one-stop mobile-based financial services platform that offers digital payments, digital wallet and financing solutions to its customers, is already here with plans to invest nearly $100 million in digital finance and payment infrastructure in the country .

“We are not just a payment company. We are here to enable the country’s unbanked population to enjoy financial inclusion and help document the economy,” said Ali Mubashar Kazmi, the president of OPay Pakistan, in an interview with Dawn.

Incubated in Nigeria, the fintech plans to bring more value-added services through its smart POS (point of sale) terminals to make financial services accessible to the masses. “With our POS terminals, a merchant can act as an ATM and become a bank for their neighborhood, as these machines can be used to offer their customers all branchless banking services, from payments to deposits to withdrawals to lending,” explains Kazmi, who has over 25 years of experience in the banking industry.

“We want to be the power that can help Pakistan achieve faster economic development. Our economy needs what we do and what we plan to do; we can use our POS machines to not only document the economy, but also give access to the 80 percent financially excluded population in the country to small ticket loans, says the president.

China-backed OPay plans to invest nearly $100 million in digital finance and payment infrastructure

With only around a fifth of the population connected to financial services (mostly limited to the very basic service of opening checking bank accounts) and less than 2pc of people having access to capital/credit, the sky is the limit for companies like OPay. “The unbanked population cannot even access the most basic financial services to invest in their business, limiting their potential. No one should be denied access to capital simply because of their circumstances and social status. This must change now,” says he.

OPay’s entry into Pakistan was facilitated by its ability to raise $400 million in funding from international investors led by Japan’s SoftBank. The company was valued at $2 billion.

In Pakistan, OPay has already deployed nearly 10,000 POS machines – about 11 of the total 92,000 machines deployed across the country – in partnership with commercial banks and plans to expand the number up to 200,000.

“We believe that at least half a million POS machines can be deployed across Pakistan and we are ready to deploy two-fifths of this. With just 0.5 percent of the around Rs 8 trillion retail transactions done on credit/debit cards , the potential for growth in Pakistan is huge, says Kazmi while explaining the company’s future plans to expand its footprint in the country’s digital finance sector.

“We intend to soon deliver a poor man’s credit card and small ticket loans to the unbanked and underbanked population. We are also about to launch our digital wallet,” he says, adding that his company has received State Bank of Pakistan’s permission for some of its operations while approvals for other products are awaited.Some products will be launched in collaboration with the existing major banks.

“Our smart POS terminals are a bank branch where all types of payments can be made. Several value-added services such as bill payment, mobile top-up, cash-in, cash-out and money transfer to their customers can be used not only by bank account holders, but also by cash-based customers, he says.

However, most value-added services related to banking services will only be available on these terminals when and if OPay secures a digital banking license. “OPay sees Pakistan as the most important market in the future as there is a lot of room to work on the digitization of the economy. But I feel things are not moving at the speed they should in Pakistan. It is still a challenge, says Kazmi.

OPay has made major contributions to the Nigerian cash-based retail economy’s turnaround to a digital payment economy. “As Pakistan has one of the lowest private sector lending penetration in the world and the highest cash-to-deposit ratio, we plan our offerings in the digital banking space by targeting underbanked sectors such as SMEs, agriculture and informal sector consumers whose financial needs are mostly not covered by commercial banks, Kazmi elaborates.

“If we are able to fix our banking and financial sector to serve our unbanked and underbanked population through the digitization of these services, half of our economic problems will soon be gone.”

Published in Dawn, The Business and Finance Weekly, August 8, 2022