The Pakistani rupee still passes from hand to hand with an intimacy that no screen can replicate. From the morning tandoor to the late-night tea stall, cash dominates daily transactions, carrying not only economic value but also cultural weight. Yet beneath this tradition-bound surface, Pakistan is experiencing one of the most ambitious shifts in its financial history: the steady, contested move from cash to digital money.This transformation is not a linear tale of replacement, where apps and platforms simply displace notes and coins. Instead, it is a story of overlap, negotiation, and competing logics — a society where the folded banknote still signals trust in ways a screen cannot, but where digital rails increasingly undergird both commerce and policy. By 2025, the question is no longer whether Pakistan will digitize its economy, but how quickly and how inclusively it can do so, and at what cost to old forms of trust and exchange.
The Cash Culture
Cash has deep roots in Pakistan. For decades, it has not just been the default medium of exchange but a symbol of liquidity, freedom, and anonymity. It requires no electricity, no literacy, no intermediary. In rural bazaars and urban markets alike, it keeps the economy moving when digital systems fail. The preference is reflected in the structure of the economy itself: an estimated 72.5% of Pakistan’s non-agricultural labor force works in the informal sector, with the shadow economy valued at around $457 billion — nearly 40% of GDP. Cash also offers resilience in a country where connectivity is uneven and trust in institutions often fragile. Electricity outages, patchy 4G coverage, and the memory of sudden account freezes reinforce the attachment to physical money. For millions of Pakistanis, especially in rural districts, cash is not a fallback — it is the only viable medium.
A Digital Surge
Despite these entrenched habits, the past decade has seen a remarkable acceleration of digital finance. In 2015, only 16% of adults in Pakistan had a bank account. By 2023, that figure had risen to 64%, marking one of the steepest gains in South Asia. Among women, account ownership doubled from 23% in 2018 to 47% in 2023, reflecting targeted efforts to reduce the gender gap in financial inclusion (Dawn).The scale of digital payments is equally striking. In fiscal year 2024, 84% of retail payments were digital, with transaction volume and value rising by roughly 35% year-on-year. The State Bank’s instant payment platform, Raast, has become a flagship of this transformation. By mid-2024, it had processed 496 million payments worth Rs11.6 trillion .
The momentum continued into 2025. In the third quarter of FY25, 89% of all retail transactions were digital by volume. Mobile banking apps alone handled 1.686 billion payments worth around Rs27 trillion, underscoring the centrality of smartphones in the new financial landscape. E-commerce has also ridden this wave: by late 2024, digital wallets and accounts were responsible for 94% of transaction volume and 74% of value in online trade.
Gender and the Digital Divide
The digital shift is not uniform. Despite improvements, women remain less likely to use mobile internet and digital financial services. The GSMA Mobile Gender Gap Report 2023 found that South Asia has the widest gender disparities in mobile ownership and internet use, and Pakistan is no exception. Cultural constraints, digital literacy gaps, and affordability continue to hinder adoption.
Yet the trajectory is positive. GSMA’s 2024 update noted that women’s mobile internet use in Pakistan grew at a faster rate than men’s, narrowing the divide. Combined with national account ownership data showing a leap to 47% among women, the direction is clear: digital finance is becoming an arena of empowerment, though one still shaped by uneven access and structural barriers.
The Banking Sector Under Strain
The rapid digitization of payments has collided with a banking sector under stress. PwC Pakistan’s 2023 banking report highlighted liquidity pressures, overexposure to government securities, and sluggish private-sector credit growth as key risks. The challenges are compounded by inflation, currency depreciation, and low trust in formal institutions. Still, banks are not standing still. Mobile apps have become the frontline of competition, with incumbents and fintech challengers racing to acquire customers. PwC’s 2024 “Road to Sustainability” report noted improvements in deposit mobilization and a modest rebalancing of asset-deposit ratios, but emphasized that sustainable profitability will depend on innovation and deeper integration of digital channels.
The State as Innovator
For policymakers, the push toward digital finance is both economic and political. The State Bank of Pakistan has cast digitization as essential to broadening the tax base, curbing informality, and stabilizing fiscal flows. Raast, with its low-cost, instant architecture, is designed not only to improve convenience but to reshape habits. Merchant onboarding into Raast’s P2M ecosystem has accelerated since 2024, with retailers increasingly integrated into formal digital rails. Global actors are reinforcing this shift. Visa announced in 2024 that it aims to quintuple the number of businesses in Pakistan accepting digital payments within three years, via a strategic partnership with 1Link. Meanwhile, the government’s “Uraan Pakistan” national plan (2024–29) has placed digital reform and financial modernization at its center.
Informality and Resistance
Despite these advances, cash’s hold remains formidable. The size of Pakistan’s informal economy means that many workers and small businesses see little incentive to digitize. Cash transactions shield income from taxation, preserve flexibility, and provide immediate liquidity. For street vendors or day laborers, digital platforms often introduce friction — requiring bank accounts, smartphones, or familiarity with apps that remain inaccessible or intimidating.
The digital surge has also created anxieties about surveillance. In a society where financial privacy is valued, the traceability of digital transactions raises fears of state overreach. The very efficiency that policymakers prize can look like exposure to ordinary users.
Regional Lessons
Pakistan is not alone in this struggle. India’s experience with Unified Payments Interface (UPI) shows how quickly digital systems can scale when backed by state policy, private innovation, and user trust. Yet even in India, cash use persists alongside digital payments. Bangladesh, meanwhile, has leaned heavily on mobile money services like bKash, achieving wide adoption but also sparking debates about regulatory oversight and systemic risk.
Pakistan’s trajectory reflects both lessons: the necessity of building low-cost, interoperable rails like Raast, and the inevitability of coexistence between digital and cash for the foreseeable future.
Trust, Technology, and Transition
At the heart of the shift is trust. Cash is trusted because it is tangible, immediate, and anonymous. Digital platforms must earn equivalent trust by proving their reliability, affordability, and security. Connectivity outages, cybersecurity breaches, or high transaction fees could slow momentum. Conversely, convenience, interoperability, and network effects will accelerate adoption. The metaphor often used in policy circles is that Pakistan is “leapfrogging” into a digital future. But leapfrogging is never effortless. It requires not just technology but careful choreography of regulation, inclusion, and cultural adaptation.
Ending Reflections
Pakistan today sits between two monetary worlds. In one, the folded note continues to grease transactions from chai stalls to wedding halls, carrying social trust and cultural familiarity. In the other, instant transfers light up mobile screens, linking buyers and sellers across cities, reducing frictions, and promising transparency. The journey ahead will not be smooth. Yet the evidence suggests that Pakistan is moving irreversibly toward a more digital economy, even if cash remains stubbornly resilient. By 2025, digital payments are no longer an elite experiment but a mass phenomenon, touching nearly every sector of commerce. The task now is not simply to expand access but to ensure that inclusion is meaningful, trust is sustained, and innovation does not outpace regulation.
Pakistan’s digital rupee dream, then, is not about erasing cash. It is about rebalancing the country’s financial DNA — stitching together the resilience of old habits with the possibilities of new technologies. How Pakistan navigates that stitching will shape not just its economy, but the everyday lives of its people, for decades to come.
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