News Analysis |
Alipay, the online payment platform owned by the Chinese tech giant Ant Financial and e-commerce leader Alibaba, is set to begin its services in Pakistan by the end of this year. A deal was signed between Norwegian multinational telecommunications company and Ant Financial Services Group back in March this year.
Accordingly, the latter invested $184.5 million for a 45% stake in Telenor Microfinance Bank, a subsidiary of Telenor Group. The investment was made with the aim to further the development of Telenor Microfinance Bank’s mobile payment and digital financial services in Pakistan.
Microfinance or microcredit is a type of banking service that is provided to the unemployed or low-income groups or individuals who don’t have access to finance otherwise. The amount may range from a $100 to a few thousand dollars
Ant Financial was founded in 2014 and is dedicated to building a technology-driven open ecosystem. It is an online payment services provider that enables individuals and businesses to execute e-commerce transactions in a secure manner. It operates on Alipay, the world’s largest mobile, and online payments platform.
Ant Financial’s consumer lending has reached over 600 billion Yuan or $95 billion. “Ant Financial is pleased to be in this strategic partnership with Telenor Group. Alipay’s technologies make us uniquely placed to achieve our mission of bringing the world equal opportunities,” Eric Jing, CEO of Ant Financial said.
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Easypaisa, Pakistan’s first mobile financial services platform, is offered by the Telenor Microfinance Bank or TMB. Telenor acquired a 51% share in the then Tameer Microfinance Bank (Pvt.) in 2008. And Easypaisa was launched in 2009. According to a report by the state bank of Pakistan’s agricultural credit and microfinance department, it has since developed as the largest branchless banking service in Pakistan, in terms of agent network, transaction value, and active accounts.
Microfinance or microcredit is a type of banking service that is provided to the unemployed or low-income groups or individuals who don’t have access to finance otherwise. The amount may range from a $100 to a few thousand dollars. The history of microfinance can be traced back to the 19th century. American political philosopher and theorist Lysander Spooner wrote about the benefits of smaller amounts of credit to farmers and small-business owners as a way of getting people out of poverty.
Alipay has a presence in over 110 countries across Asia, Latin America Russia, and Europe. Some IT experts note that thanks to Alipay, the Chinese economy transitioned to a cashless society much more smoothly than developed countries elsewhere
In the modern age, microfinance became popular first in Bangladesh in the 1970s and then in Latin America as well. Today, the World Bank estimates that nearly 16 million people worldwide are being served by over 700 microfinance institutions. And 2005 was celebrated by the UN as the International Year of Microcredit 2005.
In Pakistan, there are a number of microfinance banks and institutions. The PMN or Pakistan Microfinance Network of organizations engaged in microfinance to improve outreach sustainability of microfinance services in the country, According to a report by the Pakistan Microfinance Network, in 2016, there were 4.2 million active borrowers that included 2.3 women borrowers as well.
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The Gross Loan Portfolio has increased from PKR 33.1 billion in 2012, PKR 61.1 billion in 2014 to PKR 132 billion in 2016. There is no doubt that there is a lot of potential for growth in the microfinance industry in Pakistan. Easypaisa shops alone serve over 22 million users on a monthly basis in Pakistan. Telenor Pakistan has over 40 million subscribers in Pakistan. The telecom giant has invested over $3.5 billion in Pakistan since 2005 when it began operations.
The scale of these services is set to improve the partnership with Ant Financial. “Partnering with a world leading payment provider like Ant Financial will strengthen Telenor Microfinance Bank’s future payment platform and set new standards in the digital banking business in Pakistan,” Sigv Brekke, CEO of Telenor Group said.
Easypaisa, Pakistan’s first mobile financial services platform, is offered by the Telenor Microfinance Bank or TMB. Telenor acquired a 51% share in the then Tameer Microfinance Bank (Pvt.) in 2008
At the moment, Ant Financial is undergoing an approval process from the State Bank of Pakistan and the Competition Commission of Pakistan. The Competition Commission prohibits undertakings from abusing a dominant position in the market by participating in anti-competitive agreements and resorting to deceptive marketing practices. Its mandate is sanctioned under the Competition Act, 2010.
Alipay has a presence in over 110 countries across Asia, Latin America Russia, and Europe. Some IT experts note that thanks to Alipay, the Chinese economy transitioned to a cashless society much more smoothly than developed countries elsewhere. Many Pakistanis use Alibaba to shop online and order consumer goods from China.
Read more: Pakistan one step closer to a cashless society
With a lot of untapped potential with millions of citizens without access to formal banking networks and services, the entry into Pakistani markets of the technology already mastered by the Chinese e-commerce giant will help in transforming the Pakistani economy as well.