By Moaaz Manzoor

Pakistan's shift towards cashless retail payments continued to gather momentum during the third quarter of FY2025-26 as QR-code payments and digital merchant acceptance expanded further, enabling more consumers to pay directly from their bank accounts and mobile wallets, according to the State Bank of Pakistan's Payment Systems Quarterly Review.

The report shows that the number of merchants accepting QR-based digital payments continued to grow during January-March 2026, reflecting the wider adoption of low-cost digital payment infrastructure among retailers and small businesses. By the end of the quarter, more than 2.6 million merchants had been onboarded or registered on the Raast Person-to-Merchant (P2M) platform, substantially expanding the country's digital payment acceptance network.

The growing merchant network is gradually changing the way retail payments are made in Pakistan. Instead of relying on cash or card terminals, customers can now make instant payments by scanning QR codes through their banking applications or digital wallets, allowing funds to be transferred directly into merchants' accounts in real time.

According to the report, QR-based payments continued to record healthy growth during the quarter as both merchants and consumers increasingly adopted digital payment solutions. The expansion forms part of the State Bank's broader strategy to promote low-cost, interoperable payment systems capable of serving businesses of all sizes, particularly small retailers that traditionally operated almost entirely on cash.

The wider acceptance of QR payments has also reduced the cost of entering the digital economy for merchants. Unlike conventional point-of-sale terminals, QR codes require minimal infrastructure, making them particularly attractive for grocery stores, pharmacies, restaurants, fuel stations and neighbourhood retailers.

The report indicates that Pakistan's broader digital payments ecosystem continued to expand alongside merchant adoption. Digital channels processed 3.4 billion retail transactions worth Rs68.3 trillion during the quarter, accounting for approximately 92% of all retail payment transactions by volume. Mobile banking applications, digital wallets, internet banking and Raast remained the principal drivers of this expansion.

The increasing use of QR payments is also being supported by a rapidly expanding digital customer base. By the end of March 2026, mobile banking and digital wallet registrations had exceeded 132 million, while nearly half of Pakistan's bank accounts were linked with a mobile banking application or digital wallet. This growing customer base is creating greater demand for merchants to accept electronic payments rather than cash.

The State Bank has been encouraging financial institutions, payment service providers and fintech companies to expand digital payment acceptance as part of its broader financial inclusion agenda. Wider merchant acceptance not only facilitates faster and more secure transactions but also supports the documentation of the economy by increasing the use of formal payment channels.

The report suggests that Pakistan's digital payments landscape is gradually moving beyond individual fund transfers towards wider acceptance of electronic payments at retail outlets. As the merchant network continues to expand and more consumers adopt mobile banking services, QR-based payments are expected to play an increasingly important role in reducing cash dependence and strengthening the country's digital financial ecosystem.

Credit: INP-WealthPk