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Interoperability and the Pathways Towards Inclusive Retail Payments in Pakistan

Interoperability of retail payment instruments is not an objective in its own right; rather it is a means of achieving other desirable objectives. Interoperability can promote a range of intermediate objectives such as greater productive efficiency, convenience for customers and dynamic efficiency through promoting competition within the financial sector. However, the attainment of intermediate objectives like these must be prioritized and sequenced in order to reach broader desired outcomes. In Pakistan, two such wider outcomes are relevant: first, the goal of greater financial inclusion; second, the goal of reducing the use of cash for government payments. These two goals may be combined in the vision of an ‘inclusive cash lite’ society, in which cash is still used but is no longer pervasive. This paper from CGAP explores the challenges and way ahead for retail payments.

CGAP is a global partnership of more than 30 leading development organizations that works to advance the lives of poor people through financial inclusion. Using action-oriented research, we test, learn and share knowledge intended to help build inclusive and responsible financial systems that move people out of poverty, protect their economic gains and advance broader development goals. We research and experiment to achieve proof of concept and extract lessons that can be built to scale by our partners, who apply our insights in the marketplace.

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