PTBP Web Desk
payment landscape has undergone a remarkable transformation, with digital channels now handling 87% of retail payments by volume. This marks a pivotal shift in consumer behavior, showcasing growing confidence in digital transactions. The State Bank of Pakistan (SBP) has released its Quarterly Payment Systems Review (PSR) for Q1 FY25, which not only celebrates this achievement but also underlines the country’s journey towards a cashless, digitally inclusive economy.
The report, covering the period from July to September 2024, documents a robust increase in the adoption of digital payment methods, improvements in infrastructure, and a noticeable move away from traditional cash and paper-based payment instruments. With retail payments in Pakistan growing by 8% in volume, reaching 1,951 million transactions with a value of Rs 136 trillion, the digital payment sector has seen a 9% quarterly growth in both volume and value, amounting to 1,699 million transactions worth Rs 36 trillion.
This growth is particularly evident in the dominance of digital channels, which now process nearly all retail transactions—1,699 million out of the total 1,951 million. Over-the-counter (OTC) transactions have dwindled, accounting for just 13% or 251 million transactions. In terms of value, digital payments have captured 27% of the market, up from 24% in the previous quarter, with a total value of Rs 36 trillion against OTC’s 73% or Rs 100 trillion.
Mobile banking applications from Banks, Microfinance Banks (MFBs), Branchless Banks (BBs), and Electronic Money Institutions (EMIs) have been instrumental in this shift. These apps facilitated 1,301 million transactions, amounting to Rs 19 trillion, marking an 11% increase in volume and 14% in value. The user base for these mobile banking services also expanded, growing by 4% to 96.5 million users from 93.0 million in the previous quarter.
E-commerce payments have seen a significant uptick, with a 29% increase in transactions, totaling 118 million. Remarkably, 91% of these payments were made through digital wallets, indicating a preference for this method over traditional card-based systems.
The infrastructure supporting this digital surge includes an increase in Point-of-Sale (POS) terminals, now at 132,224, handling 83 million transactions worth Rs 429 billion. The ATM network also expanded to 19,170 units, processing 243 million transactions worth Rs 3.9 trillion, reinforcing its role in cash withdrawals.
Efforts towards financial inclusion have been bolstered by the expansion of branchless banking agents, particularly in underserved rural and remote areas. These agents processed 28 million bill payments/mobile top-ups and 75 million cash deposit and withdrawal transactions, demonstrating the critical role of branchless banking in extending financial services to all corners of the country.
Retail merchants accepting digital payments have also grown by 16%, facilitated by initiatives that promote payments via mobile wallets, QR codes, and other digital tools, thus enhancing economic inclusion across different regions.
The Raast instant payment system has been a significant contributor to this digital payment boom, handling 197 million transactions worth Rs 4.7 trillion, thereby enhancing the efficiency of instant payments for both individuals and businesses.
Pakistan’s payment ecosystem is on an upward trajectory, thanks to the collaborative efforts of banks, fintech companies, payment service providers, and regulatory bodies. The SBP’s commitment to fostering a sustainable, inclusive financial environment ensures that digital innovation continues to empower and integrate more Pakistanis into the financial system.
This progress not only reflects Pakistan’s potential to transition to a fully digital economy but also builds trust and reliability in its financial services, paving the way for a more inclusive economic future.
