Announcement of the second round of the Fintech Support Forum:

Recognizing the significance of fintech in driving economic growth and financial inclusion, the need for a platform to address challenges faced by fintechs in Pakistan has become increasingly evident. The Fintech Support Forum was created to foster collaboration, overcome obstacles, and facilitate the sustainable development of the fintech ecosystem in the country.

For the first round, two initiatives were undertaken earlier this year by PFN as part of the fintech support forum. These resulted in the form of a policy paper that gathered the key issues being faced by the stakeholders and also propose solutions by offering recommendations gathered. The paper was shared with policy stakeholders and input was gathered from two activities. These two initiatives are;

1. Consultative dialogue with stakeholders on challenges and opportunities for EMI’s in Pakistan
2. Fintech Industry Surveys

Since then, there have been changes and PFN has started collecting a new set of industry feedback and concerns. Furthermore, with of the latest version of the policy being released, the second round for the Fintech Support Forum is being launched.

We request all our respected members to provide feedback and input in the 2nd Fintech Support Forum. We hope it can play a crucial role in addressing the challenges faced by the fintech industry in Pakistan. By bringing together key stakeholders, the forum aims to pool valuable insights, experiences, and perspectives to propose actionable solutions and recommend policy changes.

Some of the issues highlighted by the industry stakeholders so far are as follows:

• Key pain points being faced by the industry that shall be taken up with the regulators in upcoming meetings; 1) Cash in Cash out, 2) Capping 3) NADRA fees.

It has been suggested that PFN should collect data on the unit economics for Digital lenders (APR, 60 day products’ charges, default rate, cost of funds, operational cost). It is important to ascertain whether the cap as resulted in reduced profitability. For this PFN is to seek insight by consulting with JAZZ and Easypaisa.

• Digital financial inclusion and development of the fintech ecosystem.

An essential aspect of our technological infrastructure lies in ensuring ubiquitous internet access and robust fintech capabilities. The availability of reliable 4G connectivity nationwide is paramount. It is imperative to emphasize the detrimental impact of politically motivated internet bans, particularly on commercial activities and banking operations. We should underscore the significance of addressing these challenges, exploring solutions that allow telecom companies to sustain 'always on' banking services, even in situations where voice and data communication may be restricted.

• FBR Barrier to develop Retail. The barriers imposed by the Federal Board of Revenue (FBR) hinder the growth of the retail sector. Retailers, often characterized by technological reluctance, also exhibit inherent resistance to becoming part of the tax network. Our objective should center around empowering 5.2 million small and medium-sized enterprises (SMEs), recognizing that their hesitancy stems from the apprehension of potential harassment by tax authorities. We need to come up with a few good suggestions on how perceived harassment can be reduced.
• Publicly stated govt policy and ambition to kill cash. Interventions are needed to ensure every tier 1 merchant (restaurants, hotels, schools, etc)  must have digital payment options.
• Common QR is needed, larger players should be able to provide cash in / cash out services at commercially acceptable rates.
• Digital has to be cheaper than cash. The industry need to come up with ways to get support from governmental bodies to make it happen, while allowing for a small margin for the players.
• Financial viability of fintech players. This is a critical consideration. Establishing a robust ecosystem is a prolonged and challenging endeavor, with numerous players entering and exiting the market. While such fluctuations are natural, government bodies should concentrate on the ultimate goal and permit experimentation and pivoting along the established roadmaps. Inevitably, there may be errors, but a corrective course will be charted.

It is imperative that the government refrains from interfering in market forces or pricing dynamics. Prices are inherently determined by the willingness of buyers to pay for desired services. If prices are reduced to unsustainable levels, fintech entities may cease to exist, resulting in a lack of services and consumers.