Karandaaz Pakistan, under its Pilot to Scale Program has partnered with Haball, a B2B financial technology company, to run a project that proves the significance of digitizing all supply nodes in the retail value chain for higher acceptance of digital payments. Under this particular grant, Haball, in collaboration with a corporate entity and branchless banking wallet provider will digitize an entire value chain enabling distributors and their retailers to order and make payments digitally from manufacturers to end-consumers. The hypothesis for this pilot project is that the acceptability of digital payments increases if supply chain players from manufacturer to distributor and retailer and to the end consumer are all using digital payment platforms. For the purposes of the pilot, Haball will create an ecosystem where payments are made digitally from corporate to retailer level and vice versa. Since retailers will be enabled with digital wallets for making value chain payments, this, in turn, will help them receive payments digitally as well, and the end-consumers will also be able to make digital payments for everyday household items.
The pilot is expected to prove that while the paper-based payment instruments bring with them a host of problems, including manual reconciliation, which is prone to errors and delays and can be taxing for downstream retailers and merchants, enabling retailers to digitally accept payments is not possible with singular efforts of microfinance institutions and telcos. In order to increase the uptake, a holistic institutional approach involving multiple parties is needed to make sure that all the nodes are streamlined.
Ali Sarfraz, CEO Karandaaz Pakistan said, “Karandaaz is currently running multiple programs to support the digital financial services sector of Pakistan and build models and solutions for the financial inclusion of the unbanked and underbanked population. In addition to empowering those who do not have an account, we have specific programs that target the underbanked population with pilots that introduce financial deepening to such segments. Karandaaz Pilot to Scale projects in partnership with different private sector entities are supporting the overall digital financial services ecosystem in the country by making it possible to test innovative ideas for viability in the Pakistani market and scale the successful ones and disseminate learnings for wider use. I am happy to note that under this project, Haball is taking a top-down approach and its partner corporate will mandate the uptake of digital payments for the whole supply chain. Such a solution can have a far-reaching impact. The SMEs involved in the value chain will be able to have easier access to finance as lending institutions will have a better view of the businesses’ existing financial position. This also means that these formal lending institutions can offer customized loan and lending products for each individual business in any supply chain.”
Rehan Akhtar, Chief Digital Officer of Karandaaz Pakistan said, “The categories for Pilot to Scale projects have emerged based on the learnings from the past interventions undertaken by Karandaaz in partnership with the private industry from 2016 to 2019 and the white spaces in the market. The value chains in focus under this pilot to scale grant project are from agriculture, retail, and manufacturing sectors and the private sector institutions including banking and non-banking financial institutions, FMCGs, logistics companies, fintechs, B2B service providers, value chain aggregators, and platforms, etc. can apply for grants under this program. The objective of focusing on these categories is to broaden the horizon of Karandaaz interventions and include all major efforts, in addition to payments.”
Speaking about the significance of this grant, Omer Bin Ahsan, CEO Haball said, “Partnership with Karandaaz is to achieve mutual goals that are financial inclusion and promotion of digital payments by integrating tightly into each value chain. We are also leveraging our partnership with Karandaaz to involve relevant financial institutions to integrate with the value chain directly. This shall enable frictionless supply chain payments under this pilot and enhance the digital payment canvas. Haball Pvt. Ltd. is a B2B financial technology company focused on eliminating manual order processing, reconciliation, and paper-based payment methods that bloat up the cost of doing business.”
Women’s transition into financial inclusion is often held back by the psychological barriers they face that may include hesitation in attending training events due to the unequal gender ratio at the training centers or the absence of a local support system in the form of female change agents. Haball has planned to employ women brand ambassadors as part of the on-ground activation in the targeted locations. This on-ground team will conduct training sessions for women on how to use the existing technology for making payments, gather data on which use-cases can facilitate uptake of digital payments amongst women, and encourage customers including women to open mobile wallets and transact with retailers digitally.
According to the State bank of Pakistan’s Quarter-3, FY19 Report, Real-Time Online Branches (RTOBs) had the highest share in the value of transactions, roughly 82.2% – 236.1 million transactions of value PKR 17.5 trillion. This channel is mostly used for value-chain payments and has only decreased by 10% in the last 13 years.
Karandaaz Pakistan is currently accepting new proposals under this Pilot to Scale Program in the categories of digital payments, digitizing payments in value chains, and use-cases of digital channels. Entities that already have a play in the value chain, have a focus on innovative solutions for digitizing payments either in down-stream part or up-stream part or both and commit to using learnings from this pilot to scale their operations can apply for grants under this program.