Pakistan’s efforts to build a cashless economy are progressing, yet digital payments continue to trail behind regional and global counterparts due to structural and behavioral constraints, according to PwC Pakistan’s Banking Publication 2025. The report highlights that cash remains a dominant medium, accounting for nearly 34% of GDP as of June 2025, more than double the levels seen in countries like India and Bangladesh. This persistent reliance on cash reflects the large size of the undocumented economy and poses a barrier to broader financial inclusion.
Despite these challenges, regulatory initiatives are driving measurable growth in digital transactions. State Bank of Pakistan’s instant payment system Raast recorded 45 million registered IDs by mid-2025, processing 1.3 billion transactions valued at Rs29.6 trillion. Both the volume and value of transactions more than doubled compared to the previous year, while the number of QR-enabled merchants surpassed one million, twice as many as the prior year. These figures indicate that digital payment infrastructure is gradually expanding, though adoption remains uneven across the economy.
Merchant adoption of point-of-sale terminals remains limited, with only around 159,000 active users, far below levels in comparable emerging markets. Mobile banking penetration is similarly modest, covering roughly 15% of total bank accounts. Aamir Ibrahim, Chairman JazzCash International, noted that entrenched usage habits and merchant economics continue to slow the pace of digital payment adoption. He emphasized that digital payments must become cheaper, simpler, and safer than cash to achieve widespread acceptance. Strengthening security measures and customer education will be critical to building trust, while innovative monetization models will help ensure affordability for merchants without adversely affecting banks and payment service providers.
State Bank of Pakistan officials have highlighted the broader economic costs of a cash-heavy system. Deputy Governor Saleem Ullah estimated that about Rs11.5 trillion remains outside the formal banking system. Redirecting even 20–30% of this cash into banks could improve liquidity and expand lending to priority sectors. PwC further projects that digitizing a modest share of cash-based transactions could save roughly Rs164 billion annually while contributing to a reduction of the undocumented economy, which is estimated at nearly 40% of GDP.
While digital payments are expanding, experts caution that technology alone will not be sufficient to drive systemic change. Coordinated efforts among banks, fintech firms, telecom operators, and regulators are essential to modify user behavior, expand merchant acceptance, and translate growth in transaction volumes into sustainable economic benefits. This indicates that Pakistan’s cashless economy ambitions, while gaining momentum, require continued strategic investment and cross-sector collaboration to achieve long-term impact.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
