Despite Prime Minister Shehbaz Sharif’s push to promote a cashless economy, fewer than 700,000 retailers across Pakistan have adopted any form of digital payment system so far, according to a briefing presented to the premier.
According to a news report, retailers, who remain among the largest cash handlers in the economy, have shown limited participation in digitalization efforts. As of September, less than 700,000 retailers were linked to digital payment platforms — with only 39,000 in Islamabad.
The prime minister has set an ambitious target of connecting two million merchants by June 2026, though resistance from the trading community continues to slow progress. He tasked Minister of State for Finance Bilal Azhar Kayani with overseeing and monitoring implementation of the initiative.
According to the briefing, currency in circulation stood at 34% of total money supply as of June 2025. The government’s proposal to raise the withholding tax on cash withdrawals to 1.5% could further drive cash hoarding instead of digital adoption.
Tax officials noted that traders remain the weakest link in formalisation efforts, with limited integration into the tax net despite repeated attempts. The government is now focusing on connecting traders to digital systems to track transactions and improve tax collection. Officials highlighted that while the Federal Board of Revenue (FBR) initially reported Rs693 billion in income tax payments from retailers last year, the FBR chairman later confirmed the actual figure was Rs166 billion — far below the Rs606 billion paid by the salaried class.
The meeting also reviewed progress on digitalisation efforts in government services. Mobile applications in Islamabad are being linked with QR-based payment systems, and obtaining new business licenses will now require digital payment integration.
Officials reported that digital banking adoption has exceeded targets, with 112 million users active on mobile and internet platforms against the target of 105 million for December 2025. The prime minister called these figures encouraging and noted that for the first time, during Ramazan, financial assistance under the Benazir Income Support Programme (BISP) was transferred digitally through wallets.
The meeting was informed that 10 million BISP digital wallets will be fully activated by the end of November, with the next tranche of aid to be distributed through them. The government also plans to expand government-to-person digital payments by 60% by the end of the year, up from the current 35%.
The prime minister instructed the State Bank of Pakistan to accelerate digital financial inclusion, terming current targets “not ambitious enough.” The government expects financial inclusion to reach 68% of the population by December 2025 and 70% by the following year.
Sharif reiterated that moving toward a digital economy would “improve governance and curb corruption,” urging all departments to meet their assigned targets within the specified timeframe.
