Technological advancement has become integrated into every sphere of life, including our daily transactions. Globally, countries are reshaping their economies through dynamic shifts and innovations in digital technology, using these changes to their advantage and to outrun their competitors.
FINTECH
Technological advancement has become integrated into every sphere of life, including our daily transactions. Globally, countries are reshaping their economies through dynamic shifts and innovations in digital technology, using these changes to their advantage and to outrun their competitors.
Fintech is a rapidly growing sector around the world, and digital financial systems are being introduced to enhance transactions both domestically and internationally. Pakistan is also adapting to this global trend by introducing Raast as a fast-track, real-time payment system that aims to digitalise finance and facilitate transactions between digital wallets and banks.
Raast was launched by the State Bank of Pakistan on January 11, 2021 as one of Pakistan's most important digital reforms, much like India's UPI (Unified Payments Interface). Both UPI and Raast are national payment platforms designed to reduce cash dependence and modernise daily transactions. While UPI is embedded in everyday transactions and used by corporate executives and street vendors alike, Raast still remains a misunderstood term in Pakistan.
The vision of Raast as a digital payment platform is to reduce cash dependency and promote financial inclusion, but this has yet to happen, not because of a lack of technology, but because of a lack of understanding and awareness. Most users across the country perceive Raast as a separate digital wallet, like Easypaisa and SadaPay, rather than a national payment system that connects digital wallets and facilitates digital transactions. This is a very common issue in rural areas, where cash remains the most prevalent mode of payment for everyday transactions and digital payments are often mistaken for fraud.
The lack of understanding is primarily due to limited familiarity with digital technology, low literacy levels and a lack of trust in digital payments. Recent studies reveal that financial illiteracy is slowing financial inclusion in the country, as people are unable or unwilling to adopt digital wallets and payment systems such as Raast. Many users are unable to link digital wallets, scan QR codes or even access digital banking apps.
Despite the rapid growth of digital payments in Pakistan, the overall transaction volume is still not evenly distributed across digital payment channels. According to the Annual Payment Systems Review by the State Bank of Pakistan, digital payments in the most recent financial year accounted for 88 per cent of retail payments. Unless this misunderstanding is addressed, Raast will not be able to achieve what UPI has achieved in India.
Looking at India today, most retail payments are digital, indicating a significantly higher level of digital literacy than in Pakistan. In India, UPI has successfully transformed the way people conduct daily transactions. Today, UPI accounts for about 85 per cent of digital payments in India, enabling a substantial share of India's retail transactions to be conducted digitally. The adoption of UPI is evident in the fact that approximately 99.5 per cent of young people use it. QR codes have become a financial habit in the Indian economy, with hundreds of millions of users and merchants relying on them for payments.
Raast's cumulative transactions number in the hundreds of millions, with tens of millions of registered Raast IDs, indicating growth but still lagging behind UPI's success in India. This comparison demonstrates that it is crucial not only to develop technology but also to build the human capacity needed to support the country's digital financial revolution.
Raast can evolve from a national payment system into a cornerstone of Pakistan's financial inclusion and economic modernisation agenda, much as UPI transformed India's payment ecosystem
Real-time payment systems like Raast and India's UPI are a testament to the potential of national infrastructure to significantly reduce cash usage and increase financial inclusion. Machine learning, cloud computing and the use of standardised APIs that enable banks and other digital applications to share customer information safely and efficiently have made payments more accessible, faster and more automated worldwide. Today, fintech is no longer optional but a fundamental tool for inclusive growth and economic efficiency.
For Pakistan, digital retail transactions are only beginning to gain momentum, with more than one million merchants now using QR payments nationwide, a sign of a developing digital ecosystem capable of supporting future innovation. Even with these advances, the adoption of Raast lags behind that of similar systems worldwide in everyday use, largely because public understanding of the system remains limited.
To truly realise the potential of its digital economy, Pakistan must look beyond its borders and learn from the best practices of international payment networks. This includes implementing AI-driven fraud protection, enabling fintech startups through APIs and API interoperability, and establishing regulatory mechanisms that encourage innovation without compromising consumer privacy. Doing so will place Raast on the map not only as a national infrastructure project but also as a fintech platform capable of facilitating seamless transactions, advancing financial inclusion and enabling low-cost international transfers that can enhance cross-border trade and economic ties.
To make this possible, Pakistan must adopt a multi-layered strategy to address barriers to adoption, regulatory gaps and ecosystem bottlenecks. The State Bank should launch a national financial literacy campaign to dispel the misconception that Raast is a digital wallet and educate citizens about the safe use of digital IDs, QR codes and digital wallets, with support from industry stakeholders. Second, policies should be introduced to encourage merchant digitisation by subsidising the costs of QR code adoption for small businesses, providing marketing support and ensuring a smooth onboarding process so that even street vendors feel comfortable joining the cashless economy.
Third, regulators must modernise fintech oversight to keep pace with emerging technologies gaining global traction, including AI-powered fraud detection and APIs enabling greater data sharing, while maintaining robust privacy and security safeguards to build trust among stakeholders. Fourth, open banking standards and cross-border payment connectivity should be prioritised for Pakistan's export- and diaspora-driven economy. These measures would enable fintech innovators to build services on Raast's infrastructure and make remittances faster and more affordable.
Finally, government and industry must work together to strengthen consumer protection by establishing effective monitoring mechanisms, ensuring that fees are disclosed clearly and creating simple, user-friendly complaint channels. These measures would encourage consumers to adopt digital payments with greater confidence.
If these steps are taken with urgency and clarity, Raast can evolve from a national payment system into a cornerstone of Pakistan's financial inclusion and economic modernisation agenda, much as UPI transformed India's payment ecosystem. This is not only an opportunity to digitise payments but also to digitise trust, participation and growth throughout the economy.
The writer is an MPhil scholar at the Pakistan Institute of Development Economics (PIDE), Islamabad.
