Pakistan’s efforts to transition toward a cashless economy have gained visible momentum over the past year, yet digital payments continue to trail behind regional and global peers due to deep-rooted structural challenges, according to PwC Pakistan’s Banking Publication 2025. The report highlights a widening gap between the rapid growth of digital infrastructure and the slower pace of behavioural and structural change needed to reduce the country’s reliance on cash.
The study notes that Pakistan remains among the most cash-dependent economies in the region. As of June 2025, cash in circulation accounted for approximately 34% of gross domestic product, more than double the levels observed in countries such as India and Bangladesh. This high dependence on physical currency is closely linked to the size of Pakistan’s undocumented economy, which continues to operate largely outside formal financial channels.
Despite this backdrop, recent regulatory and policy initiatives are beginning to show measurable progress. The State Bank of Pakistan’s instant payment system, Raast, has emerged as a central pillar of the country’s digital payments strategy. By June 2025, Raast had registered 45 million unique IDs and processed around 1.3 billion transactions with a total value of Rs29.6 trillion. These figures represent more than a twofold increase in both transaction volume and value compared to the previous year, underscoring growing consumer and business acceptance of real-time digital payments.
Merchant digitisation has also expanded, particularly through QR-based payment solutions. According to the report, the number of QR-enabled merchants surpassed one million by mid-2025, doubling year-on-year. This growth reflects lower onboarding costs and ease of use compared to traditional payment acceptance infrastructure, making QR codes a popular entry point for small and informal merchants.
However, the report cautions that digital adoption remains uneven across the broader economy. Only about 159,000 merchants currently use point-of-sale terminals, a figure that remains significantly lower than in comparable emerging markets. In addition, mobile banking penetration stands at roughly 15% of total bank accounts, highlighting the limited reach of digital financial services among large segments of the population.
Commenting on the findings, Aamir Ibrahim, Chairman of JazzCash International, noted that Pakistan’s digital payments ecosystem continues to fall short of regional benchmarks due to challenges related to merchant economics and entrenched cash-based habits. He emphasized that for digital payments to achieve mass adoption, they must be cheaper, simpler, and safer than cash for both consumers and merchants.
Ibrahim further stressed that as transaction volumes increase, the importance of system security and customer education will grow. Maintaining trust in digital platforms will require sustained investment in fraud prevention, data protection, and awareness campaigns. He also pointed to the need for the industry to rethink monetisation models to ensure affordability for merchants while preserving the financial viability of banks and payment service providers.
The State Bank of Pakistan has repeatedly highlighted the economic costs associated with a cash-heavy economy. According to SBP Deputy Governor Saleem Ullah, an estimated Rs11.5 trillion remains outside the formal banking system. He noted that diverting even 20% to 30% of this cash into banks could significantly enhance system liquidity and expand credit availability to priority sectors of the economy.
PwC estimates that digitising even a modest share of cash-based transactions could generate annual savings of approximately Rs164 billion. Beyond cost efficiencies, increased digitisation could play a critical role in shrinking the undocumented economy, which is estimated to account for nearly 40% of Pakistan’s GDP, while also improving tax compliance and financial transparency.
While the pace of digital payments growth is encouraging, the report concludes that technology alone will not be sufficient to drive a meaningful shift away from cash. Sustainable progress will require coordinated efforts among banks, fintech firms, telecom operators, and regulators to address structural barriers, expand merchant acceptance, and encourage behavioural change. Without such collaboration, the benefits of rapid digital payments growth may remain limited, falling short of their potential to deliver broader economic gains.
Follow the PakBanker Whatsapp Channel for updates across Pakistan’s banking ecosystem.