Pakistan's payments infrastructure is the next test

Last month, Minister of State for Finance Bilal Azhar Kayani chaired a review of the Cashless Pakistan initiative’s first year. The numbers presented were striking. Annual digital payment transactions have risen from 6.9 billion to 11.3 billion. Active digital payment merchants have quadrupled from 500,000 to more than two million. Registered digital banking users now exceed 137 million. And 92% of all retail payment transactions in the country are processed through digital channels.

By any measure, Pakistan’s shift away from cash has moved faster than most observers expected. The question that should now occupy the banking sector, and its regulators, is whether the infrastructure behind these numbers can sustain what comes next.

The government has identified 25 high-impact federal and provincial entities for complete digitalisation of payments through its national instant payment system, Raast, by December 2026. Nearly 75% of government-to-person payments are already accepted digitally. When the remainder follows, pensions, social transfers, procurement disbursements among them, the volume passing through Pakistan’s banking rails will increase materially. This is not a distant prospect. Raast processed transactions worth Rs50 trillion in 2025. The platform now has 48 million individual users. Growth at that pace puts real pressure on systems that were designed for a different era.

Banks still running legacy authorisation and processing platforms are feeling the strain. Systems built to handle thousands of transactions an hour are being asked to handle millions. When they fall short, the consequences are obvious for the consumer. A salary that does not arrive, a merchant payment that is declined, a customer locked out of their own funds.

The trust deficit that follows a bad experience is disproportionately large for first-time users, and disproportionately hard to reverse.

Pakistan’s financial inclusion progress deserves recognition in its own right. Women’s financial inclusion has risen from 4% in 2018 to 52%, with the gender gap narrowing from 47% to 30%. Active bank accounts held by women have grown from 20 million to 37 million since the launch of the Banking on Equality policy. These are real gains, built through sustained policy effort by the State Bank of Pakistan (SBP).

But the populations most recently brought into the digital side of finance are the most sensitive to service failures, because the trust is not yet solid. A salaried professional in Karachi who hits a failed transaction will simply try again in an hour. A woman in a rural area receiving her first government stipend through a digital channel, who finds the system unavailable, may not come back at all and may revert to cash. The trust deficit that follows a bad experience is disproportionately large for first-time users, and disproportionately hard to reverse.

The SadaPay episode in March illustrated this dynamic at a smaller scale. When drone strikes in the Gulf damaged AWS infrastructure in Bahrain, the fintech’s mobile application went offline entirely. Cards still worked at ATMs and point-of-sale terminals, but the app, which is the primary interface for most users, was inaccessible. Funds were safe, the outage was resolved. Even so, the incident made a structural point that is easy to overlook: as more of Pakistan’s financial activity moves onto digital platforms, the consequences of infrastructure fragility extend well beyond the single institution that experiences the failure.

Consider what Pakistan’s payments ecosystem is being asked to support over the next 12 to 24 months. The Raast-Buna integration, linking Pakistan’s instant payment system with the Arab Monetary Fund’s cross-border platform, is now live, enabling real-time remittance flows from the Gulf in Pakistani rupees. Worker remittances hit a record $41.6 billion in FY26, with the UAE and Saudi Arabia accounting for the largest corridors. PRISM+, the new real-time interbank settlement mechanism built on ISO 20022 standards, is operational. The SBP’s Cyber Shield strategy has been launched to strengthen resilience across regulated entities.

Each of these developments places new demands on bank infrastructure. Cross-border instant payments require real-time processing, sanctions screening and settlement within a single flow. ISO 20022 messaging demands richer data handling than legacy formats support. Growing merchant acquiring volumes, two million active merchants and climbing, require authorisation systems that can scale without degrading.

Some banks are already investing accordingly. HabibMetro is processing more than 3.25 million transactions daily and has begun upgrading its issuing and processing infrastructure to handle the capacity and complexity the next phase demands. Meezan Bank has completed a similar overhaul of its issuing platform, and now processes more than seven million transactions per day with peak volumes exceeding 1,300 transactions per second. These are the kinds of infrastructure commitments the sector needs to see more broadly: investments in what sits beneath the consumer-facing layer, not just what sits on top of it.

There is a tendency, in conversations about digital payments, to focus on exactly that consumer-facing layer: the app, the QR code, the wallet. But competitive differentiation among Pakistani banks over the coming years will increasingly be determined by what lies underneath. Banks that can process Raast payments, cross-border remittances and merchant acquiring transactions on modern, scalable platforms will capture the most valuable flows.

Those still relying on manual workarounds, batch processing where real-time is now expected, or downtime windows that customers no longer tolerate, will lose ground. Not necessarily to other banks, but to the fintechs and payment service providers that were built for scale from the outset.

Pakistan has accomplished something remarkable over the past few years. Moving from a predominantly cash economy to one where 92% of retail transactions are digital is an achievement that deserves recognition. The Cashless Pakistan initiative has set a clear direction, and the SBP’s Vision 2028 framework provides the regulatory architecture to support it.

What remains is the harder part: ensuring that the banking infrastructure underpinning all of this can actually deliver on the promise. The adoption story has been written. The infrastructure story is still being decided.

The article does not necessarily reflect the opinion of Business Recorder or its owners.