By Azam Tariq

Pakistan’s digital payments ecosystem expanded rapidly in 2025, supported by major infrastructure upgrades and policy initiatives aimed at improving efficiency and accessibility, according to the Financial Stability Review 2025 released by the State Bank of Pakistan (SBP).

The report indicates that digital transactions continued to dominate in terms of volume, reflecting a sustained shift away from cash-based payments toward electronic channels. The expansion was driven by growing adoption of mobile banking, internet banking, and instant payment platforms, which have made financial transactions faster and more convenient for users across the country.

A key development during the year was the implementation of PRISM+, a next-generation payment platform designed to modernize Pakistan’s financial infrastructure. The system enhances the capacity and efficiency of large-value payment processing, ensuring smoother settlement of interbank transactions and improving the overall resilience of the financial system.

In addition, the rollout of QR code-based payment solutions further strengthened the digital payments landscape by enabling seamless transactions for both consumers and businesses. These solutions have simplified the payment process, particularly for small and medium-sized enterprises, by reducing reliance on cash and improving transaction documentation.

The SBP noted that policy measures played a central role in accelerating digital payment adoption. Financial institutions were encouraged to expand digital payment acceptance through various channels, including point-of-sale systems, e-commerce gateways, and integration with instant payment systems such as Raast. These initiatives have broadened the reach of digital financial services and improved accessibility for users.

The report highlights that rising digitalization has also advanced financial inclusion by bringing more individuals into the formal financial system. Greater access to digital payment tools has enabled underserved segments of the population to participate in economic activity, reducing barriers to financial services.

At the same time, the expansion of digital payments has improved efficiency and transparency in financial transactions. Reduced reliance on cash has lowered transaction costs and enhanced the traceability of economic activity, supporting stronger financial management and more effective policy implementation.

Despite the strong growth, the SBP cautioned that rapid digitalization also introduces risks, particularly related to cybersecurity and data protection. As financial systems become more interconnected and technology-driven, ensuring the security of digital transactions remains a key priority for regulators and financial institutions.

The central bank has taken steps to strengthen regulatory frameworks and enhance the resilience of financial institutions against cyber threats. Continued investment in secure infrastructure and user awareness will be essential to sustaining the growth of digital payments.

The report underscores that the ongoing expansion of digital payments, supported by infrastructure upgrades and policy measures, is expected to play a critical role in transforming Pakistan’s financial landscape and promoting a more inclusive and efficient economy.

Credit: INP-WealthPk