Since the State Bank opened the gates for Electronic Money Institutions (EMIs) in 2020, the sector has resembled more of a survival trial than a fintech gold rush. Out of sixteen licensed aspirants, only six have successfully gone live, while four have already met an untimely end, quitting at early stages.
The vision of low-cost, agile digital wallets reshaping how Pakistan transacts has collided with the sobering economics of customer behavior, compliance costs, and business models stretched too thin. The ones that are currently afloat are SadaPay, NayaPay, Keenu, Finja acquired by OPay Pakistan, OneZapp by EP Systems and Digitt+ by Akhtar Fuiou Technologies.
The ones that have hit the gallows include Careem, Checkout.com, TAG fintech and CMPECC. 6 others are at the in-principle approval stage and one has been stuck at pilot phase since late 2024. A significant number of exits show that the economics of operating an EMI do not look much viable with regulatory walls around sources of revenue and increasing competition after the launch of DRBs.
Omer bin Ahsan of Pakistan Fintech Association (PFA) says that there is a macroeconomic challenge that needs to be kept in mind for an EMI. “The whole EMI model works on two concepts: that they earn a lot of money on card issuance but the SBP is controlling that. The regulatory walls created on the interchange are a limitation. The second is that the EMIs can invest 50% of the deposits into yield-bearing securities.”
Omer says the presumption has been that the person opening a wallet is a decently wealthy person who can keep Rs5000 to Rs10,000 in the wallet. In reality, this person does not keep that amount in the wallet and treats it like a glove compartment in a car where you keep loose change. This turns the EMI model unworkable, especially in a bad economy. “For it to work, EMIs need to get lots of deposits which are sadly not there,” Omer says.
The EMIs are also facing increasing competition after the launch of digital banks. Mashreq Bank has already launched Mashreq Neo in Pakistan, which gives a Shariah-compliant Islamic account. Mashreq’s Islamic account also gives a brackly news rate of up to 5% per annum. This means that it can pay off this percentage on its deposits and Mashreq Bank alone aims to capture 10 million Pakistanis in the next 5 years. The going for EMIs would be tough as more DRBs go live because since the offerings look similar, it would essentially be the already banked users that would hop on from either a bank or an EMI’s wallet over to the DRBs.
Syed Nadeem Hussain, a fintech veteran who founded EasyPaisa and later Raqami digital bank, says that so far only two EMIs have reached scale in Pakistan: SadaPay and NayaPay and they did it on the back of a great user interface and user experience and focused on the younger segment. One of them also has cross-border services. It is this differentiation that Nadeem believes put them ahead in the race.
They did this when no one else was doing, but the future does not look easy for them either.
“EMI is a very tough market. Applicants have jumped in using macro numbers on what they think they can convert from cash to digital. This is not enough,” Nadeem says.
“Firstly, the difference between MDR and interchange requires material transaction value and volume to make money. Secondly, without differentiation, the appeal is limited. Thirdly, there is huge competition from the two telco-based payment players (Jazz and EasyPaisa) and the large banks.”
Nadeem anticipates more EMI deaths unless they have a clear differentiated proposition.
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