Visa has partnered with Euronet Pakistan to roll out Visa SMS real-time clearing, modernising card payments and accelerating digital acceptance across the country.
Strategic Partnership to Modernize Card Payments
Visa, a digital payment giant in the world, has declared a strategic alliance involving Euronet Pakistan, the largest acquirer processor in the country, to modernize the way card payment clearing and settlement can be made. The partnership will facilitate Visa SMS (Settlement Messaging Service) in Pakistan, a universal project aimed at eliminating slowness, batch settlement with the Visa network, through real-time clearing between the POS acquirer and the Visa network.
The venture is aimed at modernising the acquiring ecosystem back-end in Pakistan. The transition of Visa and Euronet to instant clearing messages will be the basis of faster, more open and efficient electronic payments that can benefit not only banks but also merchants and consumers as well, by taking the place of the previously employed legacy offline model. The move can be connected to the overall trend in Pakistan to a cash-lite economy and more electronic transactions in the retail, services and e-commerce setting.
How Visa SMS Real-Time Clearing Works
Visa SMS presents a new generation clearing process of card transactions and point-of-sale (POS) terminals. In the classic model, authorisations are done in real time, although clearing and settlement is frequently done in bulk at some point later, which introduces delays and complexity to acquirers and merchants.
Visa SMS, once an authorisation is made, a clearing message is activated. This real-time clearing message passes between the POS acquirer or processor cardholder and Visa network, to give immediate clearing guidance and allow much quicker settlement cycles.
To acquirers who are participating, this entails:
- Reduced settlement periods, in order to get money to merchants faster.
- High level of transparency, since every transaction is cleared with real-time status view.
- Less need to have exceptions and reconciliation problems, as authorisation and clearing are intertwined.
In general, Visa SMS transforms clearing into a process that is constantly on, and which is rich in data, rather than a process that is time-delayed and which is batched. This enables the financial institutions to deal with liquidity in a better way and provide the merchants with a clear understanding of the time when they will receive payment.
Euronet Pakistan’s Role as Strategic Enablement Partner
Euronet Pakistan as a strategic enablement partner of Visa in this initiative will be central in making the adoption to be done across the market. The company is already the largest acquirer processor in the country serving several banks and payment players. Euronet under the new partnership will be in close collaboration with local POS acquirers to:
- Move Visa SMS into their systems.
- Make sure that there is technical preparedness and adherence to Visa standards.
- Development testing, introduction and continuous optimisation of real-time clearing solutions.
Kashif Gaya, CEO of Euronet Pakistan has stressed the fact that the company considers itself the facilitator of this transition to real-time clearing in the market. Through facilitating the modernisation of infrastructure and processes among acquirers, Euronet seeks to accelerate merchant onboarding, increase the acceptance of digital payments and make card payments more competitive to small and medium enterprises (SMEs) and undererved parts of the market.
This collaboration further establishes Euronet as a technology powerhouse in the payments sector in Pakistan, and offers highly advanced transaction processing and value-added solutions to banks and fintechs.
Merchant and SME Benefits and the Wider Ecosystem Benefits.
The transition to real-time clearing is likely to achieve viable advantages to merchants of any size, particularly to SMEs that experience close cash flows. Quick clearing and settlement will enable the businesses to access their funds earlier and thus, will assist them in paying the suppliers, controlling the inventory and cover their day-to-day costs more easily.
Benefits for Merchants, SMEs and the Wider Ecosystem
- Faster settlements allow merchants to access funds faster.
- Less overhead in the operation because of simplified reconciliation and reduced exceptions.
- Improved liquidity of acquirers, since real-time data enables a better understanding of the flows of transactions.
- Better trust in online transactions among the Pakistani consumers who use cash in large amounts in retailing.
In the case of small stores, pharmacies, restaurants and service providers, the faster payment and easier reconciliation provided by the use of cards and digital payments can make it much more appealing than just using cash. The adoption cycle will continue to be increased as more merchants join the board, giving consumers more points where they can make payments digitally.
Regional Ambitions and Expansion Plans
This is not the only partnership between Visa and Euronet in Pakistan. Mohamed Mousa, Vice President, Euronet and Managing Director, Middle East, Africa and Pakistan, has indicated that after successfully implementing this in Pakistan, the company will spread it to other countries within the region.
Through its real time clearing and settlement services in various markets, Euronet is expected to make businesses and financial institutions have better access to faster, transparent and secure payment services. This is likely to maximize efficiency in operations, financial inclusion and sustainable economic development in the Middle East and Africa, and Pakistan.
Pakistan is playing the role of an early adopter and reference market in this situation. The lessons applied in implementation here would be useful in informing best practices in implementing Visa SMS to neighbouring countries and other emerging markets.
Driving a Real-Time, Inclusive Digital Economy
Upon signing the deal with Euronet, Visa Country Manager of Pakistan and Afghanistan, Umar Khan, has termed the move as a significant move towards modernisation of card payments in Pakistan. The upgrade enhances cash flows of merchants by simplifying and shortening the process of acquiring flows with quicker settlement, reducing exceptions, and streamlining reconciliation, which also enables acquirers to better manage their liquidity.
The new capabilities can be embraced with ease by partners in the entire ecosystem, including banks and fintechs, as well as big retailers and small merchants. This, in the long run, will enable digital payments to be more attractive to merchants and customers, driving the movement towards the discontinuation of cash.
The partnership with Visa and Euronet supports the common vision: to become innovative, enhance payment system efficiency and create a future-thinking, real-time digital economy in Pakistan. When broadly implemented, Visa SMS-based real-time clearing has the potential to be akin to a foundation of the coming generation of digital commerce in the country, facilitating all manner of transactions, including in-store POS, all the way up to QR payments and more.
