Pakistan’s Cashless Push Struggles to Match Regional Peers

Pakistan’s transition toward a cashless economy is accelerating, but the country still lags behind regional peers due to structural challenges in its digital payments ecosystem. Industry leaders say that while transaction volumes are rising, issues around merchant economics, usage habits, and trust continue to slow widespread adoption.

According to PwC Pakistan’s Banking Publication 2025, cash in circulation stood at around 34 percent of GDP as of June 2025, making Pakistan one of the most cash-dependent economies in the region. This level is more than double that of countries like India and Bangladesh, highlighting the scale of the undocumented economy and the challenges facing digitisation efforts.

Government and regulatory initiatives are showing tangible results. The State Bank of Pakistan’s instant payment system, Raast, had 45 million registered IDs by June 2025 and processed 1.3 billion transactions worth Rs. 29.6 trillion, more than double year-on-year. QR-enabled merchants have crossed one million, signalling growing acceptance of digital payments at the retail level.

Despite growth, adoption remains uneven. Only about 159,000 merchants currently have point-of-sale terminals, and mobile banking penetration is around 15 percent of total bank accounts.

“Pakistan’s digital payments ecosystem still trails regional and global benchmarks,” said Aamir Ibrahim, Chairman JazzCash International, stressing that digital payments must become cheaper, simpler, and safer than cash to drive mass adoption.

Rising transaction volumes have also raised concerns about fraud and consumer trust. Industry leaders argue that stronger security and customer education are essential. The State Bank of Pakistan estimates that Rs. 11.5 trillion remains outside the formal banking system, and redirecting even a fraction could boost liquidity and lending. PwC estimates that digitising part of Pakistan’s cash-based economy could save Rs. 164 billion annually and help reduce the informal economy, estimated at about 40 percent of GDP.