Karandaaz Pakistan and DigiKhata Financial Services (DKFS) have signed a strategic partnership to launch an Embedded Finance Facility (EFF), the first initiative of its kind in Pakistan that transforms everyday merchant payments into a pathway to formal credit for small retailers.
Embedded Finance to Boost Digital Payments and Access to Credit
The model is designed to address two major challenges facing Pakistan’s retail sector: low adoption of digital payments and limited access to formal financing.
Pakistan’s retail and wholesale trade is a significant contributor to the country’s GDP and MSME sector, yet it remains largely cash-based. Without a verifiable digital financial history, many merchants remain invisible to lenders and are unable to access the financing needed to expand their businesses.
Digital Transactions to Build Merchant Credit Profiles
The Embedded Finance Facility introduces a feedback loop model in which every digital transaction contributes to building a merchant’s credit profile.
This enables more accurate credit scoring and allows retailers to qualify for progressively larger financing facilities as their digital transaction history grows.
The initiative also aims to transform Raast from a payment infrastructure into a broader gateway for financial inclusion while supporting the formalisation of Pakistan’s retail economy.
Karandaaz Highlights Financial Inclusion Benefits
Waqas ul Hasan, Chief Executive Officer of Karandaaz Pakistan, said the initiative embeds credit directly into the digital payments journey, creating a self-reinforcing cycle.
He noted that merchants adopt digital payments to gain access to financing, while the financing enables them to grow, formalise their businesses, and participate more actively in Pakistan’s digital economy.
DigiKhata Brings Merchant Network and Data
Adnan Aslam, CEO and Founder of DigiKhata, said the partnership combines the lending infrastructure of financial institutions with DigiKhata’s extensive merchant network and transaction data.
He added that, as one of Pakistan’s largest small-business platforms, DigiKhata provides the scale, data insights, and merchant trust needed to make embedded finance successful at the last mile.
Initiative Aims to Transform Small Business Financing
The partnership is expected to deliver long-term economic benefits for participating retailers while providing a scalable model for the next phase of digital financial inclusion in Pakistan.
By linking digital payments with formal financing, the Embedded Finance Facility has the potential to accelerate financial inclusion, strengthen small businesses, and support the country’s transition towards a more digital and formal economy.