85% of Pakistan’s B2B Transactions Still Cash-Based: Visa Report

Visa (NYSE: V), a world leader in digital payments, today released a whitepaper highlighting the advantages of digitizing SME payments — with over $121 billion worth of SME B2B activities primed for digital transformation. Umar S. Khan, Country Manager for Pakistan & Afghanistan, Visa, commented, “As a cornerstone of Pakistan’s economy, SMEs contribute 40% to the national GDP and are vital to job creation. However, despite their growth potential, many SMEs remain constrained by their reliance on cash-based transactions, which hampers efficiency and scalability”. He said Visa recognized the transformative power of digital payments in addressing these challenges. “Our latest whitepaper highlights how commercial cards can revolutionize B2B payments for SMEs, offering streamlined processes, and access to critical financial solutions”. He said that by partnering with government entities and banks, raising awareness, and collaborating with fintechs, “we can improve access to the infrastructure SMEs need to thrive”. In the State Bank of Pakistan’s Payment Systems Quarterly Review for the first quarter of 2025, 55.6 million payment cards were in circulation, with debit cards comprising 88 percent of the total. In Pakistan’s current payment market, SMEs struggle with payment and transaction challenges rooted in legacy solutions. Often, SMEs are unaware of the availability and many benefits of commercial cards. Cumbersome application processes and compliance procedures further prohibit SMEs from transitioning to digital transactions. On the other hand, banks and financial institutions view SMEs as high-risk clients due to their lack of collateral and credit histories. The report reveals a staggering 85 percent of the estimated $255 billion in Pakistan’s B2B payment flows in 2022 were cash-based, representing a significant amount of inefficiencies. In Pakistan, 15 percent of SME B2B payments are currently digital, indicating a shift to the adoption of digital channels. And while the number of card transactions for consumers and small businesses is high, much of this activity is limited to cash withdrawals. Agriculture, retail, and manufacturing sectors dominate SME payables in Pakistan. The IT industry processes a significant volume of B2B payments, with the majority being international transactions Of the estimated $255 billion in Pakistan’s B2B payment flows in 2022, over $121 billion of this opportunity originates from SMEs. These are primed for digitization, presenting a significant opportunity for commercial card solutions for the SME sector. The largest 8 percent of SMEs account for a substantial 60 percent of total SME payables, whereas small-value transactions contribute approximately $6 billion, making commercial cards more relevant, secure, and reliable for segment. Commercial cards also address many bottlenecks to SME growth including interest-free working capital, simplified cross-border trade, building business credit, and providing data-rich insights. Commercial card solutions can also empower SMEs with convenient payment options, real-time expense tracking, efficient processing, and granular spending controls. Visa’s whitepaper recommends a strong commercial card product suite that offers a range of value-added services to drive convenience, efficiency, flexibility, and spending control to SMEs. Additionally, issuers stand to gain by realizing new B2B payment streams by shifting spending from consumer to commercial cards. Furthermore, issuers can gather valuable customer data based on card usage for improved segmentation and product optimization.