ISLAMABAD: Pakistan’s push toward a cashless economy has picked up pace, but digital payments continue to lag behind regional and global peers due to structural constraints, according to PwC Pakistan’s Banking Publication 2025.
The report notes that Pakistan remains one of the most cash-reliant economies in the region, with cash in circulation accounting for around 34% of GDP as of June 2025 more than double the levels seen in countries such as India and Bangladesh. This heavy reliance on cash reflects the large size of the undocumented economy.
Despite this, recent regulatory initiatives are showing progress. The State Bank of Pakistan’s instant payment system Raast recorded 45 million registered IDs by June 2025 and processed 1.3 billion transactions worth Rs29.6 trillion, more than doubling in both volume and value compared to the previous year. The number of QR-enabled merchants also crossed one million, twice as many as a year earlier.
However, adoption remains uneven across the economy. Only about 159,000 merchants currently use point-of-sale terminals, far fewer than in comparable emerging markets, while mobile banking penetration stands at roughly 15% of total bank accounts, the report said.
Commenting on the findings, Aamir Ibrahim, Chairman JazzCash International, said Pakistan’s digital payments ecosystem continues to trail benchmarks due to merchant economics and entrenched usage habits. He stressed that digital payments must become cheaper, simpler, and safer than cash to gain widespread acceptance.
“As transaction volumes rise, strengthening security and customer education is critical to maintaining trust in the system,” Ibrahim said, adding that the industry must rethink monetisation models to ensure affordability for merchants without hurting banks and payment service providers.
The State Bank of Pakistan has also flagged the economic cost of cash-heavy transactions. According to Saleem Ullah, Deputy Governor SBP, about Rs11.5 trillion remains outside the formal banking system. Diverting even 20–30% of this cash into banks could significantly improve liquidity and expand lending to priority sectors.
PwC estimates that digitising even a modest portion of cash-based transactions could save around Rs164 billion annually and help reduce the undocumented economy, which is estimated at nearly 40% of GDP.
While digital payments are expanding rapidly, industry experts caution that technology alone will not be enough. Coordinated efforts by banks, fintech firms, telecom operators and regulators will be required to change behaviour, expand merchant acceptance and convert growth into sustainable economic gains
