Digitalisation: FBR’s Rs200,000 cash cap puts pressure on retailers, e-commerce

KARACHI: The Federal Board of Revenue (FBR) has tightened documentation of the retail and e-commerce sectors by capping cash transactions at Rs200,000 applicable to both traditional markets and online Cash on Delivery (CoD) orders. This is likely to put pressure on retailers, consumers to turn towards a cashless economy.

FBR sets Rs200,000 cash payment limit, e-commerce CoD orders

Impact on digital payments

By capping cash payments, the FBR is nudging both retailers and consumers towards digital channels (bank transfers, debit/credit cards, mobile wallets, Raast).

One reason CoD dominates in Pakistan’s e-commerce (over 80% of orders) is consumer distrust of online payments. The new cap could push platforms to build stronger trust in digital checkout.

This is likely to lead to greater financial inclusion as small businesses and e-commerce platforms integrate digital payment systems.

High-value shoppers who relied on CoD may now be pushed toward pre-payment or digital settlement, reducing dependency on cash.

Impact on e-commerce

Logistics and courier companies handling CoD will need to adjust systems to reject or split orders above Rs 200,000, which is likely to increase operational complexity.

One reason CoD dominates in Pakistan’s e-commerce (over 80% of orders) is consumer distrust of online payments. The new cap could push platforms to build stronger trust in digital checkout.

Lower cash handling by couriers may even reduce theft, fraud and cash mismanagement.

Taxing the digital frontier: Pakistan’s bold move to tap e-commerce and online revenues

This latest move aligns with International Monetary Fund (IMF) backed reforms to formalise the economy and increase tax compliance as digital payments are likely to create a trail of transactions that can be monitored and taxed.

Similar restrictions have also been enforced in other countries.

India, for instance, capped cash transactions above INR 200,000 in a day in 2017, a move that coincided with the country’s demonetisation drive and spurred the adoption of payment platforms like UPI.

Bangladesh, too, has set caps on cash payments for corporate expenses to encourage digital trails.

Pakistan’s measure mirrors these regional shifts, though adoption may be slower given the dominance of cash.

If enforced effectively, the Rs200,000 limit could help accelerate Pakistan’s transition toward a cash-lite economy, in line with IMF-backed reform commitments. Success, however, will hinge on whether retailers and consumers adapt smoothly - or resist the transition.