ISLAMABAD: Digital financial services in Pakistan are expanding rapidly, but full adoption remains a challenge. While mobile banking, Raast, and fintech solutions have increased financial inclusion, several barriers—such as high costs, regulatory gaps, and trust issues—continue to slow widespread adoption, according to the Asian Development Bank (ADB).
In its latest report, “From Cash to Digital: Advancing Financial Inclusion in Pakistan,” ADB highlights the urgent need for stronger regulations to remove these obstacles. The report stresses that the government must establish policies that lower transaction costs, promote trust in digital finance, and create a more interoperable financial ecosystem. It also suggests encouraging merchants to adopt digital payments by offering working capital loans based on digitally documented financial performance.
Despite the growth of digital financial services in Pakistan, a large portion of the population remains financially excluded. Over one billion people in developing Asia lack access to banking, with Pakistan ranking among the lowest in the region. Currently, only 21% of adults in the country have access to a bank account or mobile money provider, with women being disproportionately affected. Many still rely on informal cash-based networks, limiting their financial opportunities.
Pakistan’s financial sector has evolved rapidly over the past 15 years. Between FY 2019 and FY 2024, financial institution accounts grew by 127%. Of the country’s 241 million people, 60% are adults, yet a significant portion remains unbanked. A major step toward digital transformation was the launch of Raast, Pakistan’s first instant payment system, which has simplified person-to-person (P2P) and person-to-merchant (P2M) transactions. Since its introduction in 2021, Raast has made digital payments faster, more accessible, and free for users, contributing to the growing adoption of cashless transactions. In 2023 alone, Raast processed 102 million P2P payments, a sharp rise from 7.9 million in 2022.
The State Bank of Pakistan (SBP) reports that mobile and online transactions surged from 17% in early 2020 to 75% by September 2024. This shift was largely driven by the COVID-19 pandemic, which changed consumer behavior and accelerated mobile banking adoption. The government’s Tajir Dost scheme, which aims to regulate the country’s retail sector, has also played a role in expanding digital finance. Initially launched in six cities, the scheme has now been extended to 42 cities across Pakistan, helping retailers formalize their businesses and integrate into the digital payment ecosystem.
While digital financial services in Pakistan continue to grow, full adoption depends on swift policy changes and regulatory support. The government must implement frameworks that lower transaction costs, build consumer confidence, and incentivize businesses to transition to digital payments. Investing in financial technology, enhancing consumer protection policies, and promoting trust in digital transactions will be key to unlocking the country’s full digital finance potential. Learning from India’s UPI system and China’s Alipay, Pakistan can accelerate its transition to a cashless economy. However, without decisive action, financial exclusion will continue to hinder the country’s economic growth.
