Pakistan Is Still Severely Under-Banked
Another structural barrier lies in Pakistan’s financial inclusion gap. Even after years of reforms and digital wallet growth, a significant portion of Pakistan’s adult population remains outside the formal banking system.
Estimates suggest that tens of millions of Pakistanis who could theoretically maintain bank accounts still do not possess one. Cultural perceptions regarding conventional banking, religious considerations regarding interest, documentation hurdles, and geographic access all contribute to this gap.
Because most digital payment instruments ultimately connect to bank accounts, this banking gap directly translates into a digital payment gap.
The result is an unusual paradox: Pakistan has millions of smartphone users capable of performing digital transactions, yet the financial infrastructure that should support those transactions remains incomplete.
Merchant Incentives Are Still Misaligned
Digital payment systems succeed when they solve a merchant’s problem rather than create one.
For many Pakistani merchants, however, digital payments introduce multiple new complications:
Settlement delays that may push payments to the next business day.
Administrative requirements such as merchant account registration.
Transaction fees that reduce already narrow profit margins.
Dispute processes that may freeze funds during investigation.
In contrast, cash transactions close instantly and definitively.
Until digital payment systems provide clear, measurable advantages over cash, merchants will continue choosing the simpler option.
