Pakistan’s Telenor Microfinance Bank, a subsidiary of Norwegian telecoms giant Telenor Group, has launched a blockchain-powered cross-border remittance service in partnership with Malaysian FinTech firm Valyou.
According to a press release issued on Tuesday, the product is powered by blockchain technology developed by Ant Financial’s online payment platform, Alipay.
Pakistan currently receives about $1 billion in home remittances from Malaysia. Telenor Microfinance Bank expects the new service to significantly boost the speed and efficiency of these transactions and enable round-the-clock, real-time, traceable and low-cost money transfers. It will also ensure that the transfers are secure and transparent, and that “all information stored, shared, or uploaded through the blockchain remittance platform is encrypted with advanced protocols to protect users’ privacy”.
“This puts Pakistan on the map of very few countries in the world that have launched International Remittance using blockchain technology,” said State Bank of Pakistan governor Tariq Bajwa.
He added that remittances contributed to over 6% in Pakistan’s GDP, equivalent to over 50% of its trade deficit, 85% of exports and over one-third of imports during 2017-18. Thus, the service is important from the perspective of overall macroeconomic stability.
While tapping into the potential of blockchain technology, Pakistan has taken a negative stance on cryptocurrencies. In April 2018, the State of Bank of Pakistan prohibited dealing in virtual currencies and tokens, stating that they are not legal tender and that the central bank had not sanctioned the issuance, exchange or trading of these assets.
The news of Pakistan’s new blockchain-based remittance service follows on the heels of a similar launch in Kuwait. Last month, the National Bank of Kuwait (NBK) partnered with US-based FinTech giant Ripple to create a blockchain-powered cross-border remittance service called NBK Direct Remit.