In Karachi, a study report titled “Realizing the Promise of ResponsibleDigital Payments for Merchants in Pakistan,” prepared by the “Better ThanCash Alliance,” has indicated that widespread adoption of digital paymentsacross Pakistan by 2025 has the potential to boost the gross domesticproduct (GDP) by 7 percent, generate 4 million jobs, and increase depositsby an additional $263 billion.
The Better Than Cash Alliance, operating under the United Nations, is apartnership focused on accelerating the transition from cash to responsibledigital payments to support the achievement of Sustainable DevelopmentGoals. According to Raza Matin, Pakistan Lead for Better Than CashAlliance, the report emphasizes the need for a national digital agenda andsound policymaking for financial inclusion, which can unlock Pakistan’seconomic potential.
With adequate political will, easily implementable financial inclusionpolicies can enable previously unbanked Micro, Small, and MediumEnterprises (MSMEs) to thrive in a modernized economy. The Alliancesuggests that the execution of this agenda and policymaking should involveall stakeholders through collective efforts, ensuring that all segments ofthe population, including women, have the opportunity to participate indigital policymaking.
Raza Matin emphasizes the timeliness of accelerating financial equalityand digital financial inclusion for small merchants in Pakistan. The StateBank of Pakistan’s instant payments system, RAAST, can play a crucial rolein driving the widespread adoption of digital financial services (DFS).
Digitization is proven to have a positive impact on economic growth byboosting financial inclusion and enabling equitable participation in theeconomy. In Pakistan, MSMEs represent over 90 percent of businesses, butthey still heavily rely on cash. Digitizing this sector presents asignificant opportunity for economic growth.
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The report also highlights the importance of addressing the challengesfaced by women-led MSMEs, as they are often marginalized and excluded fromdecision-making processes. High-interest rates, exceeding 30 percent,hinder the few financial products available to MSMEs, and politicalinstability can undermine efforts to modernize the payments ecosystem anderode trust in business owners.
Merchant digitization is a shared responsibility that benefits both thepublic and private sectors. However, achieving merchant digitizationrequires a unifying vision, women-centric policies, coordinated action bymultiple stakeholders, and policies that simplify taxation processes andencourage compliance.
The report identifies 26 recommendations based on the difficulty ofimplementation at the policy level and calls for capacity building,financial education, and collective responsibility from all stakeholders topromote digital payment adoption in Pakistan.
