Dubai-based ride-hailing company Careem has received in-principle approval from the central bank of Pakistan to offer digital payment services in the South Asian country, it said on Wednesday.
The wholly-owned subsidiary of Uber has launched a fintech subsidiary, Careem Pay, to offer these services after receiving the in-principle nod from the State Bank of Pakistan (SBP) for an electronic money institution (EMI) licence.
“This paves the way for Careem Pay to bring convenient and accessible financial services to 9+ million customers, 800,000 captains [a term used for drivers on Careem platform] and 3000+ merchants both on and beyond the Careem App, subject to SBP’s final approval,” said a company statement.
Careem has earmarked a $50 million investment for the new unit to “leapfrog the fintech ecosystem in Pakistan.” It has appointed Noman Khurshid as the general manager of Careem Pay in Pakistan to lead the operations.
“With approximately 30% of the total population and 18% of women banked in Pakistan, we see this as an enormous opportunity to leapfrog cash payments into digital transactions,” said Careem CEO and co-founder Mudassir Sheikha in a prepared statement.
Pakistan, the fifth most populous country in the world, is ripe for a fintech revolution. The country has a high cash reliance; cash circulation is estimated at about 7 trillion rupees ($38.3 billion) and 85% of e-commerce transactions are paid for by cash on delivery. Seeking to capitalise on the opportunity, investors pumped $95 million into Pakistan’s fintech sector last year, making it the second most capitalised private sector in the country.
Careem Pay plans to initially offer fintech services such as bill payments, government and education fees, peer-to-peer (P2P) transfers and wallet cash-outs. It will later provide cards, inward remittances and services to enable customers and merchants to make and accept online and offline payments.
In an exclusive interview with DealStreetAsia, Careem Pay GM Khurshid explained the rationale behind the company’s move into the fintech space.
Khurshid started his journey with Careem four years ago and has held various leadership roles at the firm in Pakistan and Saudi Arabia. He was instrumental in scaling Careem services across markets and developing external strategic financial integrations. He was until recently the global head of finance at Careem Pay. He has done his MBA from the University of Manchester and is also a fellow member of the Institute of Chartered Accountants of Pakistan.
Edited excerpts of an interview: