Pakistan’s digital payment ecosystem is expanding at an unprecedented pace, yet the country continues to cling to cash as its primary mode of financial interaction. While e-banking usage and online transactions are steadily increasing, especially among younger and tech-savvy consumers, the overall adoption of digital payments remains far from universal. Many citizens still prefer cash, either due to challenges in understanding online payment systems or concerns about the risk of fraud. Others, however, view cash as unsafe in light of security issues in major cities and therefore rely heavily on digital methods instead.
The government of Pakistan has rolled out several major initiatives to accelerate digitalization across the economy, aiming to steer the country toward a fully digital and documented financial framework. Despite these efforts, consumer behavior varies significantly across retail environments. A Business Recorder survey found that around 30 to 40 percent of customers at large retailers and supermarkets in Karachi use banking channels, debit cards, or credit cards to pay for everyday purchases. However, digital payments at smaller retail shops still linger around just five percent.
A shop owner operating late hours in Karachi shared that he adopted QR code payment options due to security concerns, though most customers continued using cash. Another retailer, Muhammad Junaid, pointed out that limited awareness and low familiarity with online apps remain major obstacles to greater adoption. According to him, younger shoppers tend to favor QR and card payments, while people above 50 overwhelmingly prefer cash.
For some businesses, the shift is more pronounced. Laptop retailer Muhammad Danish reported that nearly 70 to 80 percent of his payments now arrive via online channels, including bank transfers, cards, and QR codes. Card-using customers like Junaid Iqbal highlight additional benefits, such as the removal of a 1.5 percent charge on card transactions when paying through Raast, making digital payments more cost-effective.
Pakistan’s major digital banking players continue to drive the shift toward a cashless economy. JazzCash now serves more than 54 million customers and 650,000 merchants, processing over Rs60 billion in QR transactions. Easypaisa, with over 55 million registered users and 400,000 QR merchants, processed 2.7 billion transactions valued at Rs9.5 trillion by the end of 2024, representing about 9 percent of Pakistan’s GDP. Executives at these institutions emphasize the need to further digitize merchant-level transactions and restructure costs so that cash becomes more expensive than digital alternatives, similar to the tax differences applied in restaurants.
Security remains a major talking point for consumers hesitant to adopt digital payments. Former P@SHA chairman Muhammad Zohaib Khan noted that QR code transactions are secure because each QR code has a unique identifier connected to a bank-approved application, and every fintech app must be approved by the State Bank of Pakistan. He stressed that a cashless system not only enhances transparency but also strengthens the overall documentation of the economy. However, unlike many countries where fraudulent credit card transactions are insured and refunded immediately, Pakistani consumers face delays until investigations conclude. Khan suggested banks should insure credit card transactions to increase trust in digital payments.
The State Bank of Pakistan’s latest report underscores the strong growth of digital payments. In the third quarter of fiscal year 2024–25, over 2 billion digital transactions were recorded, making up 89 percent of all retail payments by volume. However, in terms of value, digital payments accounted for just 29 percent, with the remainder still handled through traditional over-the-counter channels. Mobile apps processed 1,686 million payments worth Rs27 trillion during the quarter, marking strong quarterly growth.
Raast continues to play a transformative role in Pakistan’s payment landscape. Person-to-Person transactions increased to 368 million, while Person-to-Merchant payments surged as more than 770,000 merchants joined the system. Raast P2M volumes doubled to 1.5 million transactions, valued at Rs4.5 billion. To advance the digital ecosystem further, the SBP recently launched InvestPak, a digital investment platform designed to streamline the process of investing in government securities for both individuals and corporate entities.
Pakistan’s digital payment boom is undeniable, yet the country’s longstanding dependence on cash remains a crucial barrier. With continued government support, merchant digitization, and stronger consumer awareness, the nation moves gradually closer to a fully digital economy.
Follow the SPIN IDG WhatsApp Channel for updates across the Smart Pakistan Insights Network covering all of Pakistan’s technology ecosystem.
