Telenor Bank has recently partnered with Valyou of Malaysia to introduce Pakistan’s first blockchain-based cross-border remittance service. The service is to be powered and developed by Alipay, the online payment platform operated by Ant Financial Services Group.
The plan was unveiled at an event in Islamabad by the State Bank of Pakistan Governor Tariq Bajwa, marking a major milestone in the country’s journey to promote financial inclusion.
The blockchain technology is said to significantly boost the speed and efficiency of remittances from Malaysia to Pakistan. It is also to ensure that the money transfers will be highly secure and transparent, as all information stored, shared, or uploaded through the blockchain remittance platform will be encrypted with advanced protocols in order to protect users’ privacy.
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However, it is important to note that the SBP and Ant Financial are deliberately starting slowly in a sandbox mode for the project and depending on feedback, more countries will be added. Moreover, to promote remittances through the new service, 2 minutes of free air time per dollar is to be given to users for the remitted amount.
At the event, the Governor State Bank of Pakistan Mr. Tariq Bajwa, congratulated Ant Financial, Telenor Bank, Valyou Malaysia and Standard Chartered Bank for this new initiative and collaboration to promote the use of formal remittance channels.
Speaking on the occasion he said,
“At around USD 20 billion per year, international remittances are important from the perspective of overall macroeconomic stability and their positive spillover in improving lives of millions of families. Home remittances contributed to over 6% in GDP, equivalent to over 50% of our trade deficit, 85% of exports and over one-third of imports during FY 2017-18.”
According to him, the Government of Pakistan and State Bank of Pakistan in order to promote the transfer of home remittances have taken a number of initiatives using formal financial channels and the new block-chain technology for transfer of cross-border remittances in near real time to bring convenience and facilitation for both remitters and their beneficiaries.
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Furthermore, he hopes that the financial sector will take advantage of the current favorable market environment by investing in innovative technologies and product offerings to expand services and broaden access to financial services in the country. He also added that the blockchain-powered remittance service will make round-the-clock, real-time money transfers between the two countries possible at a competitive exchange rate, with Alipay’s transaction fees waived during the one-year trial period.
Speaking on the occasion, Eric Jing, Chairman, and CEO of Ant Financial, said
“The new remittance service is one of the examples of how emerging technologies can help countries meet their digital and financial inclusion goals. We’re thrilled to be part of Pakistan’s financial inclusion efforts and we’re dedicated to exploring breakthroughs and applying them to benefit more people in more places.”
He also thanked the State Bank of Pakistan for all the support. He said, “I congratulate both Easypaisa and Valyou on this major development that will facilitate the people in both countries, putting Pakistan on the map of fintech innovation and promoting financial inclusion. By eliminating intermediary costs, the new remittance service reduces the transactional cost for end-users, while the blockchain technology enables both senders and receivers to track their money every step of the way, significantly boosting the service’s efficiency and safety.”
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Meanwhile, Roar Bjærum, Senior Vice President, Head of Financial Services, Telenor Group & Chairman Valyou speaking on the occasion said,
“The transparency and swiftness this innovative and first-of-its-kind service brings to Pakistani users of international remittance will redefine international money transfer in the country. Currently, Pakistan receives about USD 1 billion in home remittances from Malaysia and this Easypaisa-Valyou collaboration is going to change it for the better. The service is the result of the close partnership between Telenor Group and Ant Financial Services and epitomizes our shared vision to empower societies by bringing inclusive financial services to the world.”
Overall, the aim of the service is to promote and encourage the use of formal channels for remittances, with all existing incentives offered by State Bank of Pakistan for the promotion of international remittance through mobile wallet being applicable for this service, according to Roar Bjærum.