The Federal Board of Revenue (FBR) has moved to tighten documentation and curb the cash economy by capping transactions at Rs200,000, a rule that now applies to both traditional retailers and online Cash on Delivery (CoD) purchases. The decision, which comes as part of broader efforts to formalise economic activity, is expected to put pressure on retailers, logistics companies, and consumers, pushing them toward greater reliance on digital channels.
E-commerce in Pakistan has long been dominated by CoD, accounting for more than 80 percent of online orders, as many consumers continue to distrust digital payments. The new cap is expected to act as a catalyst for change by nudging both platforms and buyers to embrace pre-payment methods such as bank transfers, debit and credit cards, mobile wallets, and the State Bank’s Raast instant payment system. For high-value transactions, customers who relied heavily on cash may now be compelled to switch to digital modes, while businesses will be under pressure to integrate electronic payment options more actively.
The move will also affect logistics and courier companies that manage CoD transactions. Orders worth more than Rs200,000 will either need to be rejected or broken into smaller deliveries, adding operational complexity to supply chains. However, lower volumes of physical cash handled by couriers could also bring positive outcomes, such as reducing risks of theft, fraud, and mismanagement during delivery. Many industry experts believe this may eventually strengthen trust and efficiency across the e-commerce ecosystem.
Analysts point out that the measure is not just about changing consumer habits but also about expanding Pakistan’s tax base. Digital payments leave an auditable trail that helps improve compliance and reduce informality in the economy. The step reflects Pakistan’s commitments under IMF-backed reforms, which emphasise documentation and transparency as key conditions for economic stabilisation. The government hopes that by restricting large cash transactions, revenue collection will increase, and the gap between documented and undocumented activity will narrow.
Pakistan is not alone in taking this route. India capped cash payments above INR 200,000 in 2017, a policy that coincided with demonetisation and accelerated the use of the Unified Payments Interface (UPI), now one of the world’s largest digital payment systems. Bangladesh has also imposed restrictions on cash spending for businesses, steering economic flows toward digital channels. Pakistan’s latest policy mirrors these regional experiences, although adoption is expected to take longer due to the entrenched preference for cash in local markets.
Whether the Rs200,000 cash limit proves successful will depend largely on how effectively it is enforced and how quickly both businesses and consumers adapt. While smaller retailers may initially resist, the shift offers opportunities for fintechs, banks, and payment platforms to capture new users. If supported by incentives, awareness campaigns, and stronger protections for online buyers, the cap could help accelerate the transition toward a cash-lite economy. For policymakers, the challenge now is to ensure that the reform does not disrupt retail and e-commerce operations but instead creates a smoother path toward digital inclusion and long-term financial transparency.