Pakistan Lags Far Behind in Adopting Digital Payment Systems

Pakistanโs digital payment infrastructure remains underdeveloped, especially when compared to regional countries such as India and Bangladesh. Despite the global shift towards digital transactions, Pakistan has yet to establish a robust national digital payment system. This concern was recently highlighted during a recent meeting of the Senate Standing Committee on Finance and Revenue. Chairman Mandviwalla emphasized the urgency of adopting digital payment systems by saying, โThe digital payment system is working successfully worldwide, and we must make progress in this area as well.โ
The Deputy Governor of the State Bank of Pakistan (SBP), Dr. Inayat Hussain, acknowledged these concerns and mentioned ongoing collaborations with organizations like Karandaaz to promote digital payment solutions. The committee has set a deadline to establish a comprehensive digital payment system by June 30, 2025.
Comparative Analysis with Regional Neighbors
In recent years, Pakistan has made substantial developments in digital payments. The State Bank of Pakistan (SBP) reported that in Fiscal Year 2024 (FY24), digital transactions increased to 6.4 billion, up from 4.7 billion in FY23, marking a 35% increase. The total value of these transactions reached PKR 547 trillion, a significant rise from PKR 403 trillion the previous year. Consequently, the share of digital payments in total retail bank transactions climbed from 76% to 84% during the same period.
Despite this progress, Pakistanโs digital payment landscape still lags behind neighboring countries like India and Bangladesh. In India, the Unified Payments Interface (UPI) has revolutionized digital transactions. As of January 2024, UPI facilitated approximately 81 billion transactions, underscoring its widespread adoption.
Bangladesh, too, is experiencing rapid growth in its digital payments sector. The market is projected to grow by 11.72% annually from 2024 to 2028, reaching a total transaction value of US$24.13 billion by 2028.
Challenges Hindering Pakistanโs Progress
Several factors contribute to Pakistanโs lag in digital payment adoption:
Limited Internet Penetration: With only 36.7% internet penetration, a significant portion of the population lacks access to digital services.
Policy and Regulatory Constraints: The absence of a cohesive national digital payment policy and regulatory framework hampers the development and adoption of digital financial services.
Credibility Issues: A few segments of society still donโt trust digital payment systems and rely on cash transactions. The government needs to run education campaigns to tackle this issue.
Financial Inclusion Barriers: Approximately 100 million adults in Pakistan do not have access to formal financial services, representing about 5% of the global unbanked population.
Our Opinion
Pakistanโs delay in adopting digital payment systems impedes economic growth and financial inclusion. To bridge this gap, the government and financial institutions must prioritize the development of a comprehensive digital payment infrastructure. Learning from the experiences of neighboring countries, Pakistan should implement policies that encourage innovation, expand internet access, and promote financial literacy. Moreover, establishing a robust digital payment system by the mid-2025 deadline is not just a goal but a necessity for the countryโs economic future.
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