Digital Payment Share Reaches 87% of Total Retail Transactions; SBP Report

Karachi: The State Bank of Pakistan (SBP) has reported a significant shift toward digital payments, with digital channels now processing the majority of retail transactions in the country.

According to the SBP’s quarterly payment systems review for the first quarter of FY25, retail transactions saw an 8% increase in volume, totaling 1.951 billion transactions valued at Rs136 trillion between July and September 2024. Of these, 87% were processed through digital channels, while the remaining 13% were handled through over-the-counter (OTC) methods.

The latest figures indicate that the proportion of digital payments has increased from 24% in the fourth quarter of FY24 to 27%, representing a total of Rs36 trillion. In contrast, over-the-counter payments, which are conducted through bank branches and branchless banking agents, made up 73%, amounting to Rs100 trillion.

Growth of Raast and Mobile Banking Applications

The payments landscape in Pakistan features a robust infrastructure, including PRISM, the Raast instant payment solution, 33 banks, 12 microfinance banks, five payment system operators/service providers, four electronic money institutions, and 12 branchless banking players, alongside various fintech and third-party service providers.

Payments in the country can be categorized into two primary types, large-value RTGS payments and retail payments, which are low-value transactions made during daily business or activities. Since its inception in 2022 and up to the end of the first quarter of FY25, Raast has processed 848 million transactions, totaling over Rs 19 trillion, and continues to grow at a consistent pace, as reported.

In the first quarter of fiscal year 2025, there was a notable increase in both the volume and value of transactions, rising by 17% in comparison to the fourth quarter of FY24. The volume hit 197 million transactions, while the total value reached Rs4.7 trillion. The average number of transactions each day hit 3 million. By the end of the quarter, there were 39.5 million registered Raast IDs.

Mobile banking applications offered by banks, MFBs, BBs, and EMIs have significantly contributed to this growth, with 1,301 million transactions totaling Rs19 trillion executed through these platforms in the quarter. This marks an 11% increase in volume and a 14% rise in value. The total count of users engaging with mobile banking applications saw an increase of 4.0%, climbing to 96.5 million from 93 million in the prior quarter.

E-Commerce and POS Transactions Show Strong Growth

The report also highlighted that online shopping is becoming a crucial part of Pakistan’s digital payment landscape, showing a 29% rise in online transaction activity. During the quarter, out of 118 million online e-commerce payments, a remarkable 91% were made using digital wallets, highlighting a notable transition away from conventional card-based methods.

The expansion of point-of-sale (POS) terminals reached 132,224, facilitating 83 million transactions valued at Rs429 billion. The network of automated teller machines expanded to 19,170 units, enabling 243 million transactions totaling Rs3.9 trillion, underscoring its vital function as a cash withdrawal avenue.

Initiatives aimed at incorporating overlooked communities are gaining traction, with agents of branchless banking proving essential in broadening access to financial services, particularly in rural and isolated regions. During the quarter, a total of 693,178 agents facilitated 28 million bill payments and mobile top-ups, alongside 75 million cash deposit and withdrawal transactions.

As Pakistan continues to modernize its payment systems, branchless banking agents have been pivotal in extending financial services to underserved areas, processing millions of transactions, and contributing to the growth of digital payments across the nation.