igitisation remained a buzzword in Pakistan throughout 2025, reflecting the country’s aspiration to transform the national and provincial economic systems — particularly financial operations — from cash-based to digital transactions. Both the federal and provincial governments announced digitisation plans, with centralised monitoring led by the federal government.

While the narrative around digitisation appears promising, practical steps had already been initiated earlier by fin-tech companies and later strengthened by commercial banks. State Bank of Pakistan played a leading role through the launch of RAAST.

One of the key advantages of this shift is the adoption of technology-driven solutions that reduce reliance on physical currency. Over the long term, this could ease pressure on the SBP to print money, contribute to better monetary management and potentially help contain inflationary pressures.

Despite its transformative potential, the transition to a cashless economy faces several challenges, ranging from structural constraints to capacity limitations.

The first and most critical challenge is the lack of institutional clarity — specifically, uncertainty over who is responsible for what during the digitisation process. The absence of a clearly defined lead institution has resulted in multiple stakeholders pursuing parallel initiatives, creating overlaps and inefficiencies. In some cases, various government bodies have proposed separate plans that may increase financial costs and complicate implementation.

Second, there is a conceptual gap in understanding what digitisation and cash-less transactions mean. At the provincial level, departments often hold conflicting interpretations. Some argue that daily wagers must be paid through petty cash, dismissing digital alternatives, which in turn increases the risk of fund misuse. Similarly, there is confusion between inter-bank funds transfer (IBFT) and truly cashless digital transactions.

Third, a major bottleneck lies in weak compliance and limited ownership. Departments often fail to respond on time or complete required processes within stipulated timelines. This problem is compounded by the complexity of digitisation procedures and limited technical capacity within departments to understand requirements and provide accurate information, thereby weakening monitoring and evaluation mechanisms.

Fourt, a significant challenge is poor inter-departmental and intra-departmental coordination, which further delays decision-making and implementation. Together, these issues raise serious questions about Pakistan’s readiness to fully embrace a cashless ecosystem, particularly when infrastructural and human capacity constraints are also taken into account.

Compliance procedures need to be simplified and supported by a robust monitoring and evaluation framework to ensure timely completion of tasks. Departmental processes must be streamlined to enable quick responses and smooth implementation in line with national digitisation policies.

Fifth, is the challenge linked to payment schemes such as person to merchant (any buyer want to buy something from the market and paying to shopkeeper or retailer through QR code or other modes of digital transfer.

Governments (federal and provincial) are trying to incorporate licensing into operational procedures and penalize the shopkeepers not complying with the digital payment requirements.

Such legislation will bind the shopkeepers to accept the payments but penalising lack of compliance will raise the cost of doing business and in some instances hinder businesses.

The way forward

To improve the overall cash-less and digitisation landscape, several corrective measures are essential. First, comprehensive capacity-building programmes must be introduced for government departments and authorities to develop a clear understanding of cash-less systems and digital processes. These initiatives should be embedded within the digitisation framework and extended to educate the public on the use of the new financial systems.

Second, there must be clear ownership and accountability, with a single lead institution or department responsible for steering the digitisation agenda. Third, infrastructure development should prioritise system standardisation.

Multiple parallel systems risk fragmenting data and weakening decision-making. A unified system would strengthen the overall management information system (MIS) ecosystem.

Fourth, compliance procedures need to be simplified and supported by a robust monitoring and evaluation framework to ensure timely completion of tasks. Finally, departmental processes must be streamlined to enable quick responses and smooth implementation in line with national digitisation policies.

Fifth, there is a need to sensitise traders through an outreach campaign and develop a capacity building programme for merchants. Total reliance on warnings and suspension of licences through local administration may have a negative impact on the business.

Only through clarity, capacity, coordination and commitment can Pakistan move towards a sustainable and inclusive cash-less economy.

The writer is an independent economic consultant