Habib Bank Limited (HBL) has announced a roll-out of prepaid MasterCards in a further development of Pakistan’s prepaid card market. Presumably this signals further confidence in the market, writes Anna Milne, after it took a hit in the wake of the Bank Muscat prepaid card fraud in 2013.

Prepaid is a low-risk initiative to get young people and the unbanked "masses" on the payment ladder. No wonder there are big smiles all round. It has been said that the Arab Spring helped with the popularity of prepaid due to its transparent nature and the seven million cards issued by HBL and MasterCard in the next five years alone testify this.

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Here is a rundown of the card and payment landscape as of March 2014.

The number of plastic cards, including debit, credit and ATM-only cards in Pakistan is 24.3m and is increasing at a healthy rate- for example, there was an 8.6% increase in cards in the third quarter, Jan-Mar 2014 compared to Q2.

According to RBR (Retail Banking Research) London, at the end of 2013 Pakistan has 39 ATMs for every million people; the US has 1,355 ATMs per million and the UK 1,066.

The State Bank of Pakistan said that, as of 31 March 2014, there were 4.4 ATMs for every 100,000 people; mobile and online banking are showing an upward trend, unlike credit card use; debit cards represent over 90.6% of plastic cards and credit cards only 5.5%. In the period Apr-Jun 2012, debit cards represented 88.9% of the 18m plastic cards and 6.7% were credit cards. ATM-only cards represent 3.9%. Year-on-year, the total number of cards has increased by almost 10%.

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Retail Payment Systems -Transactions

Pakistan transactions

Source: State Bank of Pakistan, Payment Systems Review January-March 2014, Q3

HBL is a significant bank in Pakistan, with over 1,500 branches and a presence in 25 countries. Pakistan fits the profile of a country that would be happy to embrace a cashless culture, not least because of its youth and this particular demographics inclination away from cash. Pakistan has one of the largest ‘youth bulges’ in the world with almost half the population aged between 15 and 49.

In Feb 2014, Lahore University of Management pledged to become the first completely cashless campus in Pakistan. Given the cost of handling cash, no doubt the powers that be would be just as keen as the innovation-pioneering youth bulge to move away from cash. Not to mention the added bonus of plastic’s ability to suffocate the murky world of illicit cash-only transactions. Nigeria is gung-ho for cashless with its new e-ID card launch. Might Pakistan be next?