Cashless economy

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Pakistan stands at a transformative juncture in its transition towards a digitised, cashless economy. With Raast, the national instant payment system, processing Rs8.5 trillion across 371 million transactions during the first calendar quarter of 2025, a surge of 146% in value, the infrastructure for a cashless economy is no longer aspirational, but operational. But with an estimated 37% of GDP still entrenched in the shadow economy, plenty of technological adoption — including forced adoption - is still required to fully reap the benefits of a cashless economy and the transparency and other benefits that come with it.

Recent momentum is undeniable. Several federal advisory panels have been focused on digital payments innovation and infrastructure, signalling the unprecedented political will behind the transition. Budget proposals to incentivise digital transactions, such as sales tax reductions for digital payments and additional taxes on large, over-the-counter transactions also support the transition while also having a secondary benefit of reducing the tax burden on salaried citizens — who usually pay income tax and are more likely to already be immersed in the digital economy — to untaxed sectors and expand the tax net beyond today's anaemic tax-to-GDP ratio of under 11%.

The cashless transition was always going to be a marathon, not a sprint. The government needs to facilitate an ecosystem that keeps the process painless and convenient for citizens. The best way to do so is to keep the momentum going by bridging connectivity gaps through expanding high-speed internet coverage, bringing more women and rural residents into the net and addressing trust deficits around data security and surveillance, along with mistrust of digital currency that has led to as much as 90% of e-commerce still working on a cash-on-delivery model.

Schemes to assist small vendors in the digital transition while continuing to subsidise cashless payments will also be critical parts of the way forward.