Digital payment methods: Pakistan govt approves huge subsidy for SBP

ISLAMABAD: The Federal government has approved billions of rupees’ subsidy for the State Bank of Pakistan (SBP) to promote large scale adoption of Raast QR code-based payments at merchants’/ retail outlets, sources told Business Recorder.

According to the Finance Ministry to promote the adoption of digital payment methods and to ensure financial inclusion, the government intends to provide targeted support through Merchant Discount Rate (MDR) subsidy to make digital transactions more affordable and boost cashless economy. This subsidy had helped alleviate the cost burden on merchants and encouraged them to shift towards cashless transactions.

Recently, Ministry of Finance apprised the ECC that the Prime Minister, during Steering Committee meeting on Cashless Economy held on July 03, 2025 directed Finance Division, Federal Board of Revenue (FBR) and State Bank of Pakistan (SBP) to review the following Steering Committee proposals: (i) to reduce import duties and taxes on payment acceptance devices (POS, QR devices, etc.); zero cost to merchants on usage of Raast QR; and (iii) Government to pay 0.50 percent or Rs.200 per transaction whichever is lower with an approximate yearly subsidy of Rs 2.5 billion.

Displaying Raast QR codes at retail outlets by August 31 a must

Furthermore, during the meeting of Steering Committee held on July 14, 2025 the Prime Minister directed to allocate an annual subsidy of Rs. 3.5 billion in CFY and for the next three fiscal years to promote large scale adoption of Raast QR code-based payments at merchants’/ retail outlets.

The Ministry of Finance apprised the ECC that on the Prime Minister’s directives, a task was generated on the Prime Minister’s Delivery Unit (PMDU) portal. Further, the SBP, in consultation with the stakeholders, devised Merchant Discount Rate (MDR) Subsidy Scheme aimed at catalyzing and accelerating the transition from predominantly cash-based retail payments to a robust, convenient and cost-effective digital payments ecosystem.

The subsidy will be paid to banks, microfinance banks and Electronic Money Institutions (EMIs) - the SBP Regulated Entities CE, at the rate of 0.5 percent of the value of Raast QR based transactions or Rs 100 per transaction, whichever is lower. The REs, in addition to the subsidy, may charge up to 0.25 percent of the transaction value for on-boarding and servicing the merchants.

The Ministry of Finance has included the key features of the proposed MDR subsidy scheme in the summary.

The Ministry of Finance further apprised the forum that as per assessment of the SBP the proposed subsidy is sufficient to incentivize digitization of merchant transactions of around Rs 700 billion per year and will promote a culture of digital payments at retail level.

Foregoing in view, approval of ECC was solicited for the following: (i) an allocation of Rs 3.5 billion in CFY through a Technical Supplementary Grant. Based on Current Financial Year consumption, allocation in next three fiscal years’ budget for the Merchant Discount Rate (MDR ) subsidy will be done subsequently; (ii) SBP be authorized to notify the Merchant Discount Rate Subsidy Scheme, as per the features available; and (iii) at the close of the financial year, the SBP will submit a comprehensive evaluation report on the MDR subsidy scheme in increasing merchant adoption, consumer usage and transaction volumes, to enable enhancement, modification or discontinuation of the program as appropriate.

During the ensuing discussion, SBP apprised the forum that during a meeting of the Steering Committee on Cashless Pakistan it was decided that an annual subsidy of Rs. 3.5 billion shall be provided for the next three years to promote largest scale adoption of Raast Person-to-Merchant (P2M) QR based payments. The Finance Division suggested that SBP submit a comprehensive report to the ECC including impact of interventions, transaction values, modification, proposals etc.

After detailed discussion, the ECC directed SBP to present a comprehensive report on the initiative for review of the ECC in July 2026.

Copyright Business Recorder, 2025