Digital Channels Now Handling 87% of Retail Payments in Pakistan 

The State Bank of Pakistan (SBP) has released its Quarterly Payment Systems Review for Q1 FY25, highlighting significant strides in Pakistan’s journey toward a cashless and digitally inclusive economy.  Covering the period from July to September 2024, the report mentions robust growth in digital payment adoption, infrastructure development, and a gradual shift away from cash and paper-based instruments.  Retail payments in Pakistan during Q1 FY25 grew by 8% in volume to 1,951 million with value of Rs. 136 trillion. Payments through digital channels witnessed a quarterly growth of 9% by both volume and value reaching to 1,699 million amounting to Rs. 36 trillion.   Digital channels are now handling 87% of retail payments by volume, showcasing the growing trust in digital payments. Mobile banking apps provided by Banks, MFBs, BBs and EMIs played a pivotal role in this growth, with 1,301 million transactions amounting to Rs. 19 trillion being carried out through these apps during the quarter, reflecting a 11% rise in volume and 14% in value. The collective number of mobile banking app users grew by 4%, reaching 96.5 million from 93 million in previous quarter.  E-commerce is also emerging as an integral component of Pakistan’s digital payments, with a 29% increase in online e-commerce payments. Of the 118 million online e-commerce payments during the quarter, 91% were conducted through digital wallets, signifying a shift from traditional card-based systems. Complementing this growth, the number of Point-of-Sale (POS) terminals expanded to 132,224, enabling 83 million transactions worth Rs. 429 billion. Furthermore, the ATM network grew to 19,170 units, facilitating 243 million transactions worth Rs. 3.9 trillion, maintaining its key role as a cash withdrawal channel.  Efforts to include underserved segments have gained further momentum, with branchless banking agents playing a critical role in extending financial services especially in rural and remote areas. Over 693,178 agents processed 28 million bill payments/mobile top-ups and 75 million cash deposit and withdrawal transactions during the quarter. Retail merchants accepting digital payments witnessed a 16% growth, driven by branchless banking initiatives that enable payments through mobile wallets, QR codes, and other digital tools. These developments underscore the importance of alternative financial channels in bridging economic disparities across regions.  The report also highlights the success of the Raast instant payment system, which processed 197 million transactions worth Rs. 4.7 trillion, further enhancing the efficiency of instant payments for individuals and businesses alike.   SBP said that Pakistan’s payment ecosystem continues to thrive due to the combined efforts of banks, fintechs, payment service providers, and regulators. This collaborative approach has fostered innovation, accessibility, and a greater sense of financial inclusion across the country, it added.