The adoption of digital payments in Pakistan’s retail sector remains sluggish in major markets, despite government and regulatory efforts to promote a cashless economy.
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While India’s digital payment ecosystem gained significant traction about a decade ago, Pakistan requires a clear roadmap and coordinated collaboration among stakeholders to foster widespread cashless transactions and enhance financial inclusion.
The government and the State Bank of Pakistan (SBP) have introduced supportive measures, including Person-to-Merchant (P2M) QR payments via the Raast instant payment system and Rs3.5 billion in subsidies to incentivize merchants and consumers.
However, experts emphasize that sustainable progress depends on active private sector involvement, including banks, microfinance institutions, payment gateway operators, and fintech companies working together to create scalable solutions for onboarding merchants across the country.
Mariam Pervaiz, Chief Commercial Officer (CCO) of ABHI Microfinance Bank, highlighted that P2M QR-based payments tackle a major hurdle for small merchants: affordable and straightforward digital payment acceptance.
“By enabling QR-based payments, financial institutions will help merchants reduce cash handling, maintain better transaction records, and improve cash-flow visibility,” she said. ABHI, partnering with 1Link, is launching a platform that allows shopkeepers, small businesses, and service providers to accept digital payments directly into their bank accounts—no expensive hardware or complicated setups required.
Benefits include faster fund settlements, transparent records, and stronger financial profiles that could help merchants access future bank financing for growth. For consumers, Raast-supported mobile apps and wallets enable seamless, interoperable instant payments.
According to the Digital Economic Census by the Pakistan Bureau of Statistics (PBS), Pakistan has over 2.7 million retail units, 188,000 wholesale trade units, and 825,000 service shops as of 2025—representing a vast potential market for digital adoption.
Najeeb Agrawalla, CEO of 1Link, stressed the importance of partnerships: “Collaborations among financial institutions are key enablers for the expansion of Raast-based merchant payments and support Pakistan’s ongoing shift toward digital transactions and a broader financial ecosystem.”
He noted that ties like those between 1Link and ABHI Microfinance Bank will accelerate merchant onboarding, integrate everyday businesses into the digital economy, and advance financial inclusion.
SBP data shows progress: Raast P2M transactions reached 4.3 million, totaling Rs17.0 billion, in the first quarter of FY2025-26, with expectations of accelerated growth ahead.
Despite these developments, challenges persist on the ground. Hamayun Sajjad, CEO of Mashreq Bank Pakistan—which recently introduced digital cross-border banking for Pakistani nationals in the UAE—called for disciplined execution in high-frequency areas like merchant checkouts, utilities, education fees, and salary disbursements.
He advocated expanding merchant acceptance through interoperable QR infrastructure, fast onboarding, and reliable settlement cycles.
Atiq Mir, Chairman of All Karachi Tajir Ittehad (representing over 500 markets and bazaars), pointed to ongoing hesitation among merchants, shopkeepers, and customers. “Government-led digital payment initiatives require greater policy clarity, structured awareness campaigns, and tangible incentives to build merchant confidence,” he said.
Adoption remains limited in major wholesale and retail markets, with concerns over income security and confidentiality needing to be addressed through education on the system’s benefits.
Overall, while infrastructure and transaction volumes show promise, bridging the gap in major markets demands stronger incentives, awareness, and trust-building to realize a truly inclusive digital payments ecosystem in Pakistan.