The unassailable uptake of digitalisation

Pakistan, and its financial services industry, suffers from a reputation problem when it comes to digitalisation on the customer end. Anecdotally, it often seems that people aren’t too satisfied with the products and user experience, especially in areas like onboarding, dispute resolution, and overall seamlessness.

Yet, one look at the payments report suggests none of it is really deterring the uptake. Almost every data point exhibits a high growth trajectory, even if people may not appreciate its extent at times. As of FY25, Pakistan boasts more than 123 million registered digital platform users across mobile, internet, branchless and other wallets. For context, that’s slightly more than half of all registered deposit-taking accounts in the country.

This is not a mean feat by any stretch of the imagination, because not too long ago, Pakistan ranked at the bottom of most rankings. Usage has been even more explosive, with mobile banking alone processing a throughput of Rs83.2 trillion in FY25, up 80 per cent over the previous year.

More importantly, it processed 1.8 billion transactions during the year, outpacing ATMs, internet banking, point-of-sale, and e-commerce combined. And remember, it’s not even the biggest driver of digital payment: that mantle belongs to branchless wallets, which recorded volumes of 4.2bn, albeit worth a much smaller Rs14.2tr.

In FY25, 21.7pc of all retail transactions processed through scheduled banks were digital — a record increase of 8.21 percentage points compared to the previous year

While the underlying growth rates differ across channels, the trend is unambiguously upwards. Internet banking throughput, despite being a distant second, also jumped 62pc to Rs38.1tr while volumes rose 24pc to 276.5m. Similarly, point of sale, probably the oldest truly digital channel in the country, saw a happening year, marked by aggressive efforts from new entrants and pricing pressures.

As a result, it finally crossed the benchmark of Rs2tr, closing FY25 at Rs2.1tr, up 37pc year-on-year. Volumes reached 377.7m, rising 39pc. There was a notable uptake on the infrastructure as well, with payment cards hitting 59.3m and the number of terminals reaching 195,849 across 159,284 merchants.

However, e-commerce, or better a subsection of it, remains a perennial disappointment. Card-based transactions did manage to cross 50m at least, reaching 51.8m in FY25 — up 30pc and finally above FY22 levels. Throughput grew at a similar pace to Rs249.7bn, from Rs194.3bn in FY24. This happened despite some expansion in acquiring infrastructure, with bank-registered merchants reaching 9,584 and electronic money institutions’ networks growing to 16,635 by June.

Limiting e-commerce to just cards is a little stupid, though, considering how Pakistan’s payments mix is largely accounts-based. Therefore, it shouldn’t really come as a surprise that branchless wallets processed a far more impressive 683.9m online merchant transactions worth Rs662.7bn during FY25. An even larger chunk of throughput surely sits within mobile banking fund transfers, though no one has figured out a way to measure it yet.

Though valuable in their own right, these numbers have one big problem: they are stripped of any context. After all, absolute values are almost guaranteed to increase in double digits, if not more. This warrants a couple of questions. First, what really constitutes “high growth”? Are we talking in reference to our own past or the peer markets?

Some percentage increase in the value of a certain variable doesn’t really tell much in itself. Say a developing economy manages to raise output by 2pc: would you consider it good or bad? In regular circumstances, not great, but if the same performance was shown during the pandemic when the rest of the world was seeing significant declines, the same figure appears impressive.

Secondly, what’s the base we are comparing against? Let’s assume we see a 4x jump in digital transactions to 30bn next year. On paper, that would be phenomenal, but what if it accounts for just 2pc of the overall exchange of money between people and businesses? How would you perceive that?

In the first case, I don’t really have an answer ready because it would take quite some time and resources to do a thorough comparative analysis of Pakistan’s payment systems with peer markets. For the second, we have at least tried to offer some context, though it’s far from perfect. For the last few years, Data Darbar has been calculating a simple “retail digitisation percentage” that measures the share of retail transactions from scheduled banks that are digital. Unlike the SBP, we don’t incorporate ATMs.

Moreover, for now, the branchless banking universe is not included in it either because of issues with consistency in data reporting. While the SBP has now made adjustments to its methodology, we don’t yet have the standardised numbers for more than three years. With these disclaimers out of the way, now let’s look at the results.

As per simple methodology, almost 60.8pc of retail scheduled banking transaction volumes had been conducted through digital channels in FY25, up from 52.5pc and broadly in line with its growth trajectory. The bigger problem had always been throughput, where both the scale and the pace of digitisation were much smaller.

And that’s where we finally had a breakout change: in FY25, 21.7pc of the retail throughput through scheduled banks was digital, witnessing a record 8.21 percentage point increase over the previous year. The challenge is how we capitalise on this and accelerate the momentum further. Because, unlike the fund transfers side, where minimum effort is enough to drive high usage, the universe of business-to-business payments would require sustained effort, not just from the central bank and its regulated entities, but also from the tax authorities.

The writer is the co-founder of Data Darbar and works for the Karachi School of Business and Leadership

Published in Brackly News, The Business and Finance Weekly, November 17th, 2025