Pakistan to Shift All Government Payments to Raast by FY26, Says SBP

The State Bank of Pakistan (SBP) plans to shift all government payments to Raast, the instant payment system, by the end of fiscal year 2025-26. It’s one of the biggest moves yet in Pakistan’s push for digital payments, with banks, fintechs, and regulators working together to reduce reliance on cash.

Government Payments Go Digital

“We have plans that with the close of this fiscal year we will be having all government payments go to Raast. We are working very aggressively,” SBP deputy governor Saleem Ullah said on Thursday while addressing the launch of a study titled Merchant Payments on Raast: Responsible Pricing for Impact and Inclusion.

To accelerate adoption, the government has rolled out a three-year subsidy programme designed to make it easier for merchants to join Raast. The programme allocates Rs3.5 billion in subsidies for the period between September 2025 and June 2026.

Under the plan, merchants will face zero or minimal costs for adopting Raast. The subsidy will be paid at a rate of 0.5% of each Raast QR-based transaction or Rs100, whichever is lower, covering fees that merchants would normally bear.

The War Against Cash

The SBP estimates that Pakistan’s economy currently holds Rs11.2–11.3 trillion in cash outside the banking system. Redirecting even Rs2.5–3 trillion of this into formal channels could deliver a major boost to banks, fintechs, and the economy as a whole.

The ultimate goal is to win the war against cash. That can only be achieved through partnerships and collaborations among stakeholders. This will help accelerate the digitalisation of the economy and expedite inclusive growth.

-SBP deputy governor Saleem Ullah

Study Highlights: Pricing and Incentives

The study, commissioned by the United Nations-based Better Than Cash Alliance in collaboration with SBP and industry players, outlines pricing mechanisms aimed at ensuring sustainable growth of merchant payments via Raast.

Key recommendations include:

• Setting a 0.35% Merchant Discount Rate (MDR) floor across most sectors to support acquirers who rely on transaction fees.

• Sector-specific rates for sensitive segments like fuel, education, and utilities.

• Zero fees on microtransactions below Rs300 to encourage mass adoption.

• Complete removal of issuer interchange fees to ease the burden on merchants.

• Assurance that early-stage P2M data will not be used for tax enforcement to build trust.

Importantly, person-to-person (P2P) transactions remain free, with no recommendation to introduce fees on them.

Pakistan Could Go Cashless in 3 Years

The event also saw an optimistic forecast from L. Nshuti Mbabazi, managing director of the Better Than Cash Alliance, who argued that Pakistan is uniquely positioned to go cashless within three years.

Pakistan has everything required to go cashless in less than three years. You have the appetite from banks, you have infrastructure, you have connectivity. When the business case is strong, infrastructure investors will come.

-L. Nshuti Mbabazi, managing director Better Than Cash

She urged regulators to craft policies that ensure no one is left behind, emphasising the importance of financial inclusion in mobilizing the trillions locked in the cash economy.

What This Means

If it works, SBP’s plan could change how money moves across Pakistan. Government payments like salaries, pensions, subsidies, and welfare would go instantly through Raast, creating a digital record and reducing leakages.

For shopkeepers, the subsidy makes it cheaper to join the system. For people, free or very low-cost transactions make everyday payments simpler.

Experts worldwide are watching Pakistan’s Raast experiment. A smooth rollout could make the country a leader in instant payments, even among developing nations.

Still, challenges remain, like winning over small merchants, keeping networks reliable, and making sure incentives last. But with SBP’s push and global support, a cashless Pakistan is no longer just an idea. It could become reality before the decade ends.

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