In Karachi, a study report titled "Realizing the Promise of Responsible Digital Payments for Merchants in Pakistan," prepared by the "Better Than Cash Alliance," has indicated that widespread adoption of digital payments across Pakistan by 2025 has the potential to boost the gross domestic product (GDP) by 7 percent, generate 4 million jobs, and increase deposits by an additional $263 billion.
The Better Than Cash Alliance, operating under the United Nations, is a partnership focused on accelerating the transition from cash to responsible digital payments to support the achievement of Sustainable Development Goals. According to Raza Matin, Pakistan Lead for Better Than Cash Alliance, the report emphasizes the need for a national digital agenda and sound policymaking for financial inclusion, which can unlock Pakistan's economic potential.
With adequate political will, easily implementable financial inclusion policies can enable previously unbanked Micro, Small, and Medium Enterprises (MSMEs) to thrive in a modernized economy. The Alliance suggests that the execution of this agenda and policymaking should involve all stakeholders through collective efforts, ensuring that all segments of the population, including women, have the opportunity to participate in digital policymaking.
Raza Matin emphasizes the timeliness of accelerating financial equality and digital financial inclusion for small merchants in Pakistan. The State Bank of Pakistan's instant payments system, RAAST, can play a crucial role in driving the widespread adoption of digital financial services (DFS).
Digitization is proven to have a positive impact on economic growth by boosting financial inclusion and enabling equitable participation in the economy. In Pakistan, MSMEs represent over 90 percent of businesses, but they still heavily rely on cash. Digitizing this sector presents a significant opportunity for economic growth.
The report also highlights the importance of addressing the challenges faced by women-led MSMEs, as they are often marginalized and excluded from decision-making processes. High-interest rates, exceeding 30 percent, hinder the few financial products available to MSMEs, and political instability can undermine efforts to modernize the payments ecosystem and erode trust in business owners.
Merchant digitization is a shared responsibility that benefits both the public and private sectors. However, achieving merchant digitization requires a unifying vision, women-centric policies, coordinated action by multiple stakeholders, and policies that simplify taxation processes and encourage compliance.
The report identifies 26 recommendations based on the difficulty of implementation at the policy level and calls for capacity building, financial education, and collective responsibility from all stakeholders to promote digital payment adoption in Pakistan.