KARACHI – Pakistan’s drive toward a cashless economy is gaining momentum, but deep-seated structural challenges continue to slow the adoption of digital payments, according to industry leaders and a new banking sector report.
“Despite progress, Pakistan’s digital payments ecosystem still trails regional and global benchmarks, with merchant economics and usage habits limiting adoption,” said Aamir Ibrahim, Chairman JazzCash International, in comments published in PwC Pakistan’s Banking Publication 2025.
Pakistan remains one of the most cash-dependent economies in the region. Cash in circulation stood at about 34% of GDP as of June 2025, more than double levels seen in countries such as India and Bangladesh, underscoring the scale of the undocumented economy, the report said.
Government and regulatory initiatives are beginning to show results. The State Bank of Pakistan’s instant payment system, Raast, recorded 45 million registered IDs by June 2025, facilitating 1.3 billion transactions valued at 29.6 trillion rupees, more than doubling in volume and value from a year earlier. The number of QR-enabled merchants also doubled to over one million during the same period.
Still, analysts say adoption remains uneven. Only around 159,000 merchants are equipped with point-of-sale terminals, compared with millions across regional peers, while mobile banking penetration stands at roughly 15% of total bank accounts, far below levels seen in other emerging markets.
Ibrahim said widespread adoption would depend on making digital payments cheaper, simpler and safer than cash. “A user-friendly, widely accessible digital ecosystem that offers transaction costs lower than cash is crucial for driving adoption,” he said, adding that the industry must also rethink monetisation models to ensure affordability for merchants without undermining the economics for banks and payment providers.
Security concerns remain a key risk as transaction volumes rise. “The industry carries a collective responsibility to strengthen security, reduce scams, and invest in customer education,” Ibrahim said, warning that trust must keep pace with growth if digital payments are to replace cash at scale.
The central bank has echoed those concerns, highlighting the economic cost of cash-heavy transactions. “Rs. 11.5 trillion remains outside the formal banking system. Redirecting even 20–30% of this cash into banks would boost liquidity, enabling greater lending to priority sectors,” said Saleem Ullah, deputy governor at the State Bank of Pakistan, according to the report. He added that digitising cash transactions would require sustained merchant onboarding, supply-chain digitisation and incentives to make digital payments as convenient and cost-effective as cash.
According to PwC, digitising even a modest share of Pakistan’s cash-based transactions could save about 164 billion rupees annually and help shrink the undocumented economy, estimated at roughly 40% of GDP.
While momentum is building, industry executives caution that technology alone will not be enough. Coordinated action by banks, telecom operators, fintechs and regulators will be needed to shift behaviour, deepen merchant acceptance and convert digital payments growth into lasting economic gains.