KARACHI:
Pakistan’s fintech sector has made visible progress in expanding digital access over the past decade, but industry leaders and development partners increasingly warn that the country’s real challenge lies not in onboarding users, but in converting access into everyday usage. An Asian Development Bank (ADB) assessment of the digital finance landscape notes that while millions now hold mobile wallets, cash continues to dominate daily transactions due to affordability concerns, trust deficits, uneven infrastructure and regulatory frictions.
“The real challenge for fintech in Pakistan is moving from access to everyday usage,” said Khayyam Siddiqi, Head of Communication and Customer Care at JazzCash. “Digital payments only replace cash when they are affordable, trusted and embedded in daily life.” With over 55 million customers, processing more than 13 million transactions a day and handling Rs15 trillion in value during 2025, JazzCash reflects the scale fintech has already achieved. Yet Siddiqi’s remarks underline a broader industry concern: scale alone does not guarantee behavioural change.
One of the most persistent challenges is users’ cost sensitivity. For low-income households and small merchants, even marginal transaction fees can discourage digital payments, according to the ADB report ‘Unlocking the Potential of Fintech in Central Asia’, December 2025. Cash, despite its inefficiencies, is still perceived as “free”, immediate and reliable. Until digital transactions consistently undercut cash in both cost and convenience, adoption is likely to remain transactional rather than habitual.
Trust is another major constraint. While awareness of digital wallets has improved, concerns over fraud, data misuse and failed transactions continue to limit user confidence. Cybersecurity incidents, phishing attempts and social engineering scams have disproportionately affected first-time users, particularly in underserved and low-literacy segments. Industry analysts argue that without stronger consumer protection frameworks, effective dispute resolution mechanisms and sustained public awareness campaigns, trust gaps will persist.
Infrastructure bottlenecks further complicate the picture. Reliable mobile internet coverage remains uneven, especially outside major urban centres. Frequent network disruptions, slow internet speeds and electricity outages directly affect transaction reliability, reinforcing users’ preference for cash. For merchants, unreliable connectivity translates into lost sales, making them reluctant to fully commit to digital acceptance.
Interoperability across platforms is another structural weakness. Despite regulatory efforts, Pakistan’s digital payments ecosystem remains fragmented, with wallets, banks and merchants often operating in silos. Limited interoperability reduces network effects, forcing users to maintain multiple wallets or revert to cash when counterparties use different platforms. This fragmentation also raises costs for merchants, who must manage multiple QR codes or settlement arrangements.
Regulatory complexity poses additional challenges, particularly for innovation beyond basic payments. While the State Bank of Pakistan (SBP) has introduced electronic money institution (EMI) regulations and digital banking frameworks, compliance costs remain high for startups. Lengthy approval processes and overlapping regulatory jurisdictions can slow product launches, discouraging experimentation in areas such as micro-investments, embedded finance and open banking.
Access to capital is another constraint for fintech firms seeking to scale responsibly. Venture funding has moderated amid global tightening in financial conditions, making it harder for startups to absorb regulatory costs, invest in cybersecurity and expand infrastructure. Smaller players, in particular, struggle to compete with large, well-capitalised platforms backed by telecom operators or banks.
Beyond commercial use cases, fintech’s role in government-to-person (G2P) payments highlights both opportunity and challenge. Digital wallets have become critical channels for welfare disbursements, enabling greater transparency and reducing leakages. Siddiqi noted that such payments help drive scale and trust by familiarising beneficiaries with digital transactions. However, sustaining usage beyond welfare receipts remains difficult, as many users cash out immediately rather than transact digitally.
Financial literacy remains a cross-cutting issue. While onboarding numbers continue to rise, understanding of digital financial products is limited. Users often lack clarity on fees, security practices and the benefits of retaining funds digitally. Without sustained literacy initiatives, fintech risks remaining a payments utility rather than a gateway to broader financial inclusion.
The transition from payments to more advanced services such as digital lending, insurance and investments also faces constraints. Risk assessment for underserved populations remains data-poor, increasing default risks and limiting product depth. Regulatory caution around consumer protection, while necessary, further slows innovation in these segments.
Despite these challenges, industry players remain cautiously optimistic. Digital platforms are expanding nationwide merchant and agent networks, now exceeding one million touchpoints, to embed digital payments into daily commerce across urban and underserved communities. As users grow more comfortable, providers are gradually layering additional services to support broader financial participation.
The ADB’s emphasis on inclusion-led fintech growth suggests that Pakistan’s next phase will depend less on headline user numbers and more on system-wide trust, affordability and reliability. Until digital payments become cheaper than cash, more reliable than informal channels and universally accepted across platforms, Pakistan’s fintech revolution will remain a work in progress rather than a fully cashless transformation.
