The evolution of e-payments in Pakistan

Pakistan's e-payments evolution reflects its rapid transformation in the fintech space, and the following is a compendium of key stages and features:

1. Early stage (before 2000)

• cash-led: The economy is highly cash-dependent and bank penetration is low (only about 15% adults had bank accounts in 2010).
• Traditional banking system: A few large banks (e.g., HBL, UBL) provide basic services with limited e-enablement.

2. Laying the foundations of infrastructure (2000-2015)

• Bank cards and ATM networks::
  • Visa/MasterCard was introduced in 2002 to promote the popularity of debit cards.
  • The number of ATMs grew to about 14,000 (2021 data), but coverage remains uneven.
• Mobile Communications Explosion::
  • Mobile phone subscriptions increased from 12 million in 2005 to 140 million in 2015, paving the way for mobile payments.

3. The rise of mobile payments (2016-2020)

• policy impetus::
  • *National Financial Inclusion Strategy (NFIS.

4. Explosive growth and innovation (2021-present)

• Policy and Regulatory Breakthroughs::

  • Raast Instant Payment System(Launched in 2021): State Bank of Pakistan (SBP)-led free instant money transfer system that is rapidly surpassing 30 million users (2023 data) and averaging Rs. 1 billion in daily transactions.
  • Electronic Money Institution (EMI) Licence: Allow non-banking institutions to offer digital wallet services, spawning a number of fintech companies.

• Fintech ecosystem thrives::

  • Mainstream payment platforms: such as JazzCash (over 40 million users) and EasyPaisa (over 25 million users) dominate, supporting bill payment, remittance, e-commerce and other scenarios.
  • emerging player: Startups such as NayaPay and SadaPay are attracting young users through simplified KYC and cross-border payments.

• Cross-border and e-commerce driven::

  • Alipay/WeChat Payment Access: The China-Pakistan Economic Corridor (CPEC) project is driving Chinese payment giants into the local market.
  • E-commerce growth: Platforms like Daraz, Foodpanda, etc. drive digital payment penetration to ~251 TP3T (2023).

5. Challenges and future directions

• Existing problems:

  1. cash-dependent:: There is still a 60% population that prefers cash.
  2. network coverage:: 4G penetration in rural areas is less than 30%.
  3. regulatory friction:: Some innovative businesses need more flexible frameworks.

• future trends:

  1. CBDC Pilot: SBP plans to test central bank digital currency.
  2. Super App Integration:: Such as JazzCash expanding into credit, insurance, etc.
  3. Deepening financial inclusion:: Serving ID-less populations through biometrics.

(Quick overview of key data)

Pakistan is reshaping the payments landscape with "leapfrogging", but the urban-rural divide and trust-building remain key battlegrounds. (Note: Some figures are industry estimates)