Comparative analysis of payment system and suggesting solutions for data security issues in Pakistan

The payment system has been the back bone of financial systems of a country. The stability and growth of an economy is directly related to the strength, reliability, scalability and efficiency of payment system. There are various kinds of instruments and channels in payment system; some are slow like paper cheques and some electronic transfers. And after the introduction of Electronic payment methods and their wide spread acceptance in many developed countries has played an important roles in stabilizing and growing their economies. But the use of electronic payment methods is still in infancy in Pakistan due to various incidents of frauds and identity thefts. In Pakistan only 12% of population has access to Bank branches but internet is available in almost every small town and mobile penetration is almost 80-90% of population. Currently there are two major systems payment systems i.e. one is using clearance of amount based on settlement of Physical cheques drawn between difference banks and second is using online interbank fund transfer . The second one is also divided into two segments. i.e. large and small amounts of transaction. Larger transactions having no limit of amount are conducted between Banks using Real Time Gross settlement Systems (RTGS ) managed by Stat bank of Pakistan and the other is using Online Interbank fund transfer for small payments having limitation of 250,000 (Two lacs fifty thousand rupees) categorized as retail payment systems. The cost of transfer for large amount is only 50 Rupees per transaction regardless of amount, but an ordinary customer has to be a good business client of bank to carry out transfer of amount online.