Making Digital the Default in Pakistan's Cashless Agenda

Pakistan’s retail payment ecosystem is now operating at national scale. According to the State Bank of Pakistan, in Q1 FY26, 2.5 billion payments were processed through digital channels, representing around 90 percent of total retail payment volume, up from 87 percent in the same quarter of the previous fiscal year (Q1 FY25). Growth is increasingly app-led: approximately 2.0 billion payments were conducted via mobile banking and wallet applications in the same quarter, accounting for roughly 81 percent of all digital payments and processing PKR 33.7 trillion in value. This scale signals a structural shift. Digital payments in Pakistan are no longer confined to pilots, early adopters, or urban niches. They are embedded across banking, branchless banking, and consumer-facing platforms nationwide. The country has successfully crossed the threshold from experimentation to mass usage.

What this scale implies, however, is a change in the nature of the challenge. As digital channels mature, the central question is no longer whether people can transact digitally, but whether they choose to do so consistently in daily life.

Where Value Actually Flows?

While digital channels now dominate transaction counts, retail payment value tells a more nuanced story. An examination of transaction values by channel shows that large-ticket economic activity continues to be concentrated in cash and branch-based instruments, even as digital channels scale rapidly in volume. This divergence reflects that Pakistan’s cashless challenge is no longer about access or adoption, but about shifting where and how value is ultimately transacted within the economy.

This distribution underscores a critical insight. While digital channels are widely used, a significant share of economic value continues to move through cashheavy, assisted, or branch-based channels. Digital payments are frequent, but often low-ticket. Cash remains dominant where transaction sizes are larger, usage certainty is required, or assistance is preferred.

Pakistan’s cashless challenge is no longer about onboarding users to digital platforms. It is about converting digital inflows into sustained digital usage, especially for everyday spending and high-frequency transactions.

What needs attention now?

Pakistan has laid strong foundations for a cashless economy through the rapid expansion of digital payment infrastructure and usage. What remains are challenges related to end-to-end digitisation of user journeys, uneven acceptance in everyday commerce, last-mile infrastructure readiness, and the trust and confidence needed for citizens and merchants to make digital payments the default. Until these gaps are addressed together, cash will continue to coexist alongside digital channels rather than being displaced by them. Importantly, this is not a single-issue constraint. It is the combined effect of structural gaps and behavioural responses that reinforce one another.