Retail Payment Systems
In the OIC Member Countries
76
The payments system is characterised by the use of credit transfers for interbank large-value
payments and a cheque-based system for customer payments or retail payments (see Payment
Systems and Electronic Fund Transfer Act, 2007). PRISM is the core element of Pakistan’s high
value payment system infrastructure and is designed to handle all large-value payments as
well as government securities transactions in the country. The retail payment system is
comprised of high volume and low value transactions, which are executed through paper
based and electronic instruments and modes including cheques, payment orders, ATMs, IBFT,
etc. In retails payments, the State Bank’s Payment Systems Department (PSD) oversees and
supervises switches, NIFT (the clearing house), banks ATM, and the alternate delivery channel
(ADC) infrastructure.
SBP has undertaken a major initiative of standardising the Financial Articles in the country. In
its first phase, the industry wide implementation of International Bank Account Number
(IBAN) based on ISO 13616 was achieved. IBAN will reduce transcription errors as well as
facilitate smooth integration of various payment systems. During the fiscal year of 2014, after
extensive consultation with the banking industry, SBP issued a new standard for the layout,
sizing, stamping and security features of customers’ cheques. Adoption of new standards by
the banking industry will significantly increase the speed and overall efficiency of the cheque
clearing system, reduce the processing costs in the longer run and minimise chances of errors
and forgeries.
In general, the banking system in Pakistan is significantly different from banking system in
leading industrial economies. For instance, most customers pay their bills at the bank after
they receive paper bills posted to their homes. Most of the time they have to stand and wait in
long queues outside the bank since the number of cashiers are inadequate. Some banks are not
eager to offer bill payment services since cash transaction is still ubiquitous in Pakistan. Lack
of trust, lack of infrastructure, as well as service charges are among the most detrimental
factors.
Large Value Payment Systems
Large value payment systems in Pakistan managed by the Pakistan Real-time Interbank
Settlement Mechanism (PRISM) provides real time settlement of interbank money transfers,
government securities and paper-based instruments, as well as individual and corporate
payments (State Bank of Pakistan, 2014). PRISM has 45 direct institutions participating in the
systems, including commercial banks, microfinance banks, development finance institutions
and the central depository company (State Bank of Pakistan, 2014).