The use of e-banking and online transactions is steadily rising in Pakistan; however, adoption remains limited when viewed across the overall population.
There are those who prefer cash because they find it difficult to use digital payment methods, or believe it comes with a higher risk of fraud.
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On the other hand, some individuals consider carrying cash risky given the law and order situation in the country, and choose digital payments instead.
Meanwhile the government of Pakistan has taken significant initiatives to accelerate the digitalization of the economy and move the country toward a fully digital economic framework.
Retail trends and consumer behavior
According to a survey conducted by Business Recorder, around 30 to 40 percent of customers at major retailers or supermarkets in Karachi make payments through banking channels, debit cards, or credit cards. However, at small retail shops, this percentage is still limited to about five percent.
A retail shop owner, speaking on the condition of anonymity, said that his mart stays open late at night, and considering Karachi’s law and order situation, he has started using a QR code for payments. However, customers still prefer to pay in cash.
Meanwhile another mart owner, Muhammad Junaid, stated that lack of awareness about online payments and limited knowledge of using various online apps are the biggest barriers to their use.
He said the younger generation prefers online payments whether through QR codes or cards, whereas people over the age of 50 tend to prefer cash payments.
Laptop retailer Muhammad Danish, while sharing his experience with Business Recorder, said that around 70 to 80 percent of payments to him are made online whether through bank-to-bank transfers, cards, or even QR codes.
Junaid Iqbal, a customer at a well-known grocery shop in Karachi, said his use of cards is not limited to grocery shopping – in fact, most of his payments are made through cards.
He mentioned a 1.5% schedule charge was applied on card payments, but now, with payments made through Raast, those charges no longer apply. Therefore, using cards have become even more viable for him.
Former banker Umair Alam said that he did not carry cash and preferred to make payments through cards. He further said that even though no schedule charges are applied on payments made through Raast, people still do not prefer online payments, which is “beyond his understanding”.
Major players in Pakistan’s digital banking sector
JazzCash Head of Communications & Customer Care Khayyam Siddiqi told Business Recorder that the digital bank now serves more than 54 million customers and over 650,000 merchants, processing QR transactions worth over Rs60 billion.
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Easypaisa Chief Business Officer Shahzad Khan said the digital bank has over 55 million registered users and over 400,000 registered QR merchants.
According to Khan, the digital bank has 2.7 billion total transactions worth Rs9.5 trillion by the end of 2024, moving 9% of Pakistan’s GDP.
Khan said the current initiatives taken by the central bank and the government to promote a cashless economy represent much-needed reforms in the right direction. However, it is equally important to further digitize business transactions, particularly within the merchant and retail sectors, to minimize cash-intensive activities.
“If you want customers to pay via digital finance, paying via cash will have to become more expensive for them to choose digital finance. A great example of this is the 5% tax on card payments vs. the 16% tax on cash payments at restaurants. The same needs to be replicated in the industry to truly move towards digitalization and e-payments,” he added.
Security measures in digital payments
Pakistan Software Houses Association (P@SHA) former chairman Muhammad Zohaib Khan said there is a unique number embedded behind every QR code — the real security lies in the application that reads the QR code and executes the transaction.
The former chairman said each QR code carries its own unique identifier, which may be linked to either an account number or a unique ID of a person. When a payment is made through an app, the app itself ensures all the security measures.
“Moreover, every fintech application that processes payments in Pakistan must be approved by the State Bank of Pakistan (SBP). This approval process includes checks on cybersecurity, compliance, and governance standards.”
According to a survey conducted by Business Recorder, around 30 to 40 percent of customers at major retailers or supermarkets in Karachi make payments through banking channels, debit cards, or credit cards. However, at small retail shops, this percentage is still limited to about five percent.
According to him, QR code payments in Pakistan are completely secure, as all transactions are conducted through the banking system and approved fintech companies, which is very important for execution and reliability.
He further stated that a cashless economy is extremely important and a major step by the government. A cashless system promotes transparency and helps ensure a documented economy.
He added that around the world, credit card frauds are covered by insurance, and in case of a fraudulent transaction, the consumer (cardholder) is immediately reimbursed. However, in Pakistan, if a fraudulent credit card transaction occurs, the funds are not returned until the investigation is completed. Currently, fraudulent transactions are not insured in Pakistan — the card is immediately blocked, and a new card is typically issued within a week.
He suggested that credit card transactions should be insured by the banks and ensure that funds are refunded immediately in case of fraud.
He also emphasized that users must take precautions, such as: never sharing their OTP (one-time password) over a phone call or email, keeping strong passwords to minimize the chances of fraud, and avoiding the use of cards on unauthorized or insecure websites.
He recommended using authorized payment gateways approved by the central bank, such as PayFast and PayPro, for secure online transactions.
Growth in digital payments
According to the SBP’s latest report on digital payments, during the 3rd quarter of fiscal year 2024-25, the number of digital payments crossed the 2 billion mark, with its share reaching 89% of total retail payments. 267 million transactions were processed on Over-the-Counter (OTC) channels, accounting for the remaining 11% share. In terms of value of transactions, digital payments accounted for only 29% (Rs48 trillion) of retail payments, while 71% (Rs117 trillion) were made through OTC channels (banks branches and branchless banking agents).
Digital payments thriving in Pakistan: Q3 sees 2bn transactions: SBP
Banks, branchless banking players, and EMIs (Electronic Money Institution) that offer payment services via mobile banking apps processed a total of 1,686 million payments amounting to Rs27 trillion through mobile apps during the quarter, with quarterly growth of 16% by volume and 22% by value.
Raast and digital payment infrastructure
As per SBP, the adoption of Raast Instant Payment System continued to gain strong momentum during the 3rd quarter. Person-to-Person (P2P) transactions increased to 368 million (25%) with a value of Rs8 trillion (31%). Meanwhile, Raast Person-to-Merchant (P2M) service saw rapid expansion, with over 770,000 merchants onboarded as of quarter end.
During this quarter, Raast P2M transactions rose by more than 2 folds to 1.5 million amounting to Rs4.5 billion.
Earlier this month, the SBP launched a new digital investment platform, titled ‘InvestPak’, aimed at streamlining and digitizing the process of investment in government securities for both individual and corporate investors.
