THE government’s ambition to turn Pakistan into a cashless economy is an idea both necessary and inspiring.
In a world steadily moving towards digital transactions, where payments are made with a scan, data drives policy and economies grow on invisible currents of code, Pakistan’s desire to embrace this future reflects both pragmatism and progress. Yet, beneath the rhetoric of ‘Digital Pakistan’ lies a far harsher truth. With over Rs. 9.5 trillion in physical cash still circulating in the economy, the road to a cashless society is long, uneven and riddled with contradictions.
The benefits of a cashless system are undeniable. It can expand the tax base, formalize vast sections of the economy and make financial systems more transparent and efficient. Countries like Singapore, Sweden and China have shown how digitalization can transform governance and create economies of scale that drive growth and accountability. But those examples also highlight what Pakistan currently lacks; a reliable digital infrastructure, public trust and a culture that values technology as much as it fears oversight. While initiatives such as the State Bank’s Raast payment system have simplified instant transactions, their reach remains limited to those already integrated within the banking system. Millions of Pakistanis remain excluded, not by choice, but by circumstance. In rural Sindh, Balochistan or the tribal districts, where electricity is unstable and internet access is intermittent, the idea of scanning a QR code to buy groceries sounds less like progress and more like fantasy. The digital economy cannot thrive where the physical infrastructure to support it barely exists.
Beyond connectivity, there is the more fundamental issue of trust and literacy. Financial inclusion requires not just tools, but confidence in using them. For many small traders, particularly in local markets and towns, cash remains the language of survival; tangible, immediate and without bureaucratic strings. The fear that digital payments will expose them to tax scrutiny or monitoring keeps them tied to cash transactions. As tax experts have often observed, people are less resistant to change when they see a direct benefit from it. But Pakistan’s tax system has long been viewed as punitive rather than facilitative. Without reforming that perception, digitization will be seen as surveillance, not support.
Then there’s the urban-rural divide, a gap that mirrors not just geography but also access to opportunity. In cities, fintech startups and banks are racing to attract users with incentives, cashback offers and smooth digital interfaces. Yet, in the small towns where much of Pakistan’s commerce takes place, there are few such options. Mobile banking apps may boast millions of downloads, but their active usage remains low, often confined to a younger, more literate demographic. Even when people download apps, poor user experience, frequent network downtime and lack of localized support discourage continued use.
Globally, countries that succeeded in building cashless systems invested not just in technology but in public trust. In China, the state worked closely with private platforms like WeChat Pay and Alipay, building an ecosystem that became inseparable from daily life. In Singapore, the government led by example, digitizing its own payment systems before expecting citizens to follow. Sweden achieved a near-cashless economy by pairing infrastructure with education, ensuring that even the elderly could navigate digital payments confidently. Pakistan, by contrast, risks pushing technology faster than society can absorb it. Moreover, the policy focus has tilted heavily toward metrics, targets such as increasing digital merchants to two million and doubling transactions to fifteen billion by 2026 rather than solving the underlying human challenges. Numbers make for good headlines, but they don’t move economies. A trader in Peshawar or Pashin won’t adopt digital payments because of a national target; they will do so when it becomes easier, cheaper and safer than cash. Incentives, not compulsion, will drive this change.
The government must rethink its digital strategy. Going digital cannot mean merely launching apps or signing MoUs with tech firms; it must involve rebuilding the foundations of participation, from reliable internet across provinces to simplified apps in regional languages and a tax regime that rewards compliance. Incentives such as cashback on digital payments, small tax rebates for e-transactions and lower data costs successfully used in India, Kenya and Indonesia can help expand inclusion. Banks and fintech firms must build bridges linking the informal economy to formal systems through loyalty rewards, micro-grants for women and youth and simpler compliance that encourages trust. The shift to a digital economy is not just about payments, it is about inclusion. A digital wallet is not merely a tool; it is an entry point into the formal economy, a step toward empowerment and a bridge between anonymity and opportunity.
In the long run, a cashless Pakistan could be more efficient, transparent and globally competitive. But progress cannot be commanded from a podium, it must be cultivated patiently, one connection, one incentive, one citizen at a time. The dream of a digital economy will remain hollow if it leaves behind those who need it most. For now, cash still reigns, not out of choice, but out of trust. If Pakistan truly intends to dethrone it, the state must first earn that trust through credibility, consistency and inclusion. The future may be digital, but it will only matter when it works for everyone, everywhere.
—The writer is PhD in Political Science, and visiting faculty at QAU Islamabad.
