Pakistan's payments infrastructure is the next test

In a recent review, Minister of State for Finance Bilal Azhar Kayani highlighted the significant progress made by Pakistan's Cashless Pakistan initiative since its inception. The number of digital payment transactions has increased from 6.9 billion to 11.3 billion annually, while the number of active digital payment merchants has quadrupled from 500,000 to over two million.

Registered digital banking users now exceed 137 million, and 92% of all retail payment transactions are processed through digital channels. These impressive figures indicate that Pakistan's transition away from cash has progressed faster than anticipated.

However, as the government aims to completely digitize payments through its national instant payment system, Raast, by December 2026, there is a growing concern about the sustainability of this infrastructure. Nearly 75% of government-to-person payments are already accepted digitally, with Raast processing transactions worth Rs50 trillion in 2025 and having 48 million individual users.

The rapid pace of growth is putting pressure on systems designed for a different era, causing issues for consumers when banks rely on legacy authorisation and processing platforms.

For first-time users, a bad experience can have a disproportionately large impact on their trust in the system, which can be difficult to recover from. In rural areas, women who receive their first government stipend through a digital channel may be reluctant to use the service again if they encounter issues, potentially reverting to cash instead.

The SadaPay episode in March demonstrated the consequences of infrastructure fragility, as a damaged AWS infrastructure in Bahrain caused Pakistan's fintech SadaPay's mobile application to go offline for its users.

Looking ahead, several developments are placing new demands on Pakistan's payments ecosystem. The Raast-Buna integration, linking Pakistan's instant payment system with the Arab Monetary Fund's cross-border platform, is now live, enabling real-time remittance flows from the Gulf in Pakistani rupees. The new real-time interbank settlement mechanism, PRISM+, built on ISO 20022 standards, is operational.

The SBP's Cyber Shield strategy has been launched to strengthen resilience across regulated entities. These advancements require banks to invest in infrastructure that can handle real-time processing, sanctions screening, and settlement within a single flow.

Banks such as HabibMetro and Meezan Bank have begun upgrading their issuing and processing infrastructure to handle the increased capacity and complexity. However, there is a tendency to focus on the consumer-facing layer, such as apps and QR codes, while overlooking the importance of underlying, scalable platforms. Banks that invest in modern, scalable infrastructure will be better positioned to capture valuable flows, while those relying on manual workarounds or outdated systems may lose ground to fintechs and payment service providers that were built for scale from the outset.

Pakistan's financial inclusion progress, particularly in women's participation, is commendable, but the trust deficit in the digital payment system remains a critical challenge that must be addressed for sustained growth and stability.