Fintech & Economic Analysis

Cashless Society vs Cash-Dominant Markets: Where Pakistan Stands in 2026

The global financial landscape is rapidly shifting toward digital-first economies, prompting central banks worldwide to optimize cash usage. In Pakistan, the State Bank of Pakistan (SBP) reports that digital payment channels now account for 92% of total retail payment volume, driven by mobile banking apps, wallet adoption, and the national Raast instant payment framework.

1. Drivers Behind Pakistan’s Digital Shift

Several key structural factors are driving the transition from cash to digital rails across urban and semi-urban markets:

• Raast Instant P2P & P2M Expansion: SBP’s Raast payment system now processes hundreds of millions of Person-to-Person (P2P) and Person-to-Merchant (P2M) transactions, connecting millions of users seamlessly.
• Mobile Wallet & Banking Penetration: Over 77% of formal bank accounts are now digitally enabled through mobile banking applications and Electronic Money Institutions (EMIs).
• Merchant QR Onboarding: Millions of retail merchants and small vendors are shifting away from paper money by deploying standardized QR payment codes.
• Government Disbursement Digitization: Federal and provincial social safety payments, pensions, and vendor disbursements are increasingly routed directly through digital rails.

2. Digital vs. Physical Cash Indicators Matrix

Ecosystem Metric	Recorded Value / Percentage	Impact on Economy
Digital Retail Share (Volume)	92% of formal transactions	Drives everyday routine payments online
Currency in Circulation (CiC)	PKR 11.9+ Trillion	Indicates high reliance on informal paper cash
Raast P2P & P2M Usage	700+ Million quarterly payments	Reduces transaction friction for retail users
Registered Merchant QR Sites	3.8+ Million Points of Sale	Expands digital acceptance in local markets

3. Challenges on the Path to a Cashless Economy

Despite massive technological progress, Pakistan remains a cash-dominant market due to structural barriers:

• Informal Economy Footprint: A significant portion of retail commerce operates off-the-books to avoid formal tax documentation and banking surcharges.
• Cash-on-Delivery (COD) in E-Commerce: While digital checkout options are growing, COD remains a primary payment method for online shoppers due to buyer protection concerns.
• Over-the-Counter (OTC) Reliance: High-value transactions and physical cash withdrawals at bank branches and agent networks still exceed tens of trillions of rupees quarterly.