Islamabad, September 2025 – The government has directed the State Bank of Pakistan (SBP) to compile a comprehensive report on the impact of the Rs3.5 billion subsidy provided under the Raast QR-based person-to-merchant (P2M) payments scheme. The Economic Coordination Committee (ECC) of the Cabinet issued the directive, setting a deadline for the central bank to submit its findings by July 2026.
The subsidy, part of the Merchant Discount Rate (MDR) support program, was designed to lower the financial burden on merchants and encourage the adoption of digital transactions across Pakistan. By reducing transaction costs, the initiative aims to accelerate financial inclusion, promote digital retail payments, and support the broader shift toward a cashless economy.
According to details shared with the ECC by the Finance Division, the scheme enables banks, microfinance banks, and Electronic Money Institutions (EMIs) regulated by SBP to claim reimbursement of up to 0.5 percent of each Raast QR transaction or Rs100 per transaction, whichever is lower. These institutions are also permitted to charge merchants up to 0.25 percent for onboarding and servicing. This dual incentive mechanism was introduced to address both institutional costs and merchant barriers in adopting digital payment systems.
The ECC expects the SBP report to cover several aspects, including the overall impact of the subsidy, key action points, and potential modifications to improve effectiveness. The report will also examine merchant adoption rates, transaction volumes, consumer usage trends, and whether the subsidy has meaningfully shifted behavior from cash to digital payments. Based on these insights, the central bank will be asked to recommend whether the subsidy should continue in its current form, be revised, or phased out.
The committee recalled that the Prime Minister had previously directed policymakers to take complementary measures, including reducing import duties and taxes on payment acceptance devices and ensuring that merchants could use Raast QR at zero cost. These measures were intended to strengthen the ecosystem around digital payments and remove barriers for small and medium-sized businesses.
In response to these directives, SBP, working with financial institutions and other stakeholders, developed the MDR Subsidy Scheme as a catalyst for digital payment growth. By subsidizing the cost of transactions, the scheme aims to ease the transition from a cash-based retail system to a more efficient, transparent, and inclusive digital framework.
Industry observers note that while Raast has achieved early success in person-to-person transactions, scaling person-to-merchant payments remains crucial to transforming Pakistan’s retail payments landscape. The subsidy was introduced to address precisely this gap, but questions remain about its long-term sustainability and whether the allocated Rs3.5 billion is sufficient to shift entrenched cash-based habits.
The SBP’s forthcoming report will play a decisive role in shaping the future of Raast QR in Pakistan. If the findings show significant progress, the program could see continued or even expanded funding. Conversely, if adoption remains limited, the government may consider redesigning the scheme to better align with merchant and consumer needs.
Follow the PakBanker Whatsapp Channel for updated across Pakistan’s banking ecosystem.