KARACHI: The State Bank of Pakistan (SBP) has announced plans to shift all government payments to Raast, the country’s instant payment system, by the end of the ongoing fiscal year 2025-26.
“We have plans that with the close of this fiscal year we will be having all government payments go to Raast. We are working very aggressively,” said SBP Deputy Governor Saleem Ullah at the launch of a study titled ‘Merchant Payments on RAAST: Responsible Pricing for Impact and Inclusion’.
He added that the government has also announced a subsidy for merchants to encourage adoption of the digital payment platform.
Subsidy Programme for Merchants
The subsidy programme, covering person-to-merchant (P2M) QR Code-based transactions, will run for three years beyond the current fiscal cycle. Last week, the government allocated Rs3.5 billion to subsidise transactions from September 2025 to June 2026.
Under the plan, merchants will face zero or minimal costs, with the subsidy paid at the rate of 0.5% of each P2M transaction or Rs100, whichever is lower.
“There is more than Rs11.2 trillion to Rs11.3 trillion available of cash in the economy. If Rs2.5 to Rs3 trillion of this is brought back into the banking system, it will benefit everybody – banks, fintechs and all stakeholders – and help overcome the huge undocumented and informal economy,” the deputy governor said.
He stressed that the ultimate goal is to “win the war against cash,” achievable only through collaboration among stakeholders to accelerate digitalisation and inclusive growth.
Study Recommendations
The United Nations-based Better Than Cash Alliance, in consultation with SBP and industry players, conducted the study launched at the event.
Its managing director, L. Nshuti Mbabazi, suggested Pakistan could transition to a cashless economy within three years, given existing infrastructure and market appetite.
“You have everything. The banks present here show that appetite. Infrastructure, the connectivity to get it going—I am sure when the business case is making sense, infrastructure investors will invest,” Mbabazi said.
The study recommended a 0.35% Merchant Discount Rate (MDR) floor across most sectors to sustain acquirers’ business models. It also proposed:
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Specific pricing for sectors such as fuel, education, utilities, and e-commerce.
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Elimination of issuer interchange fees to ease the merchant burden.
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Zero fees for microtransactions below Rs300.
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Assurance that P2M data will not be used for tax enforcement in the initial phase.
Raza Matin of Pakistan Leads, Better Than Cash Alliance, clarified that while pricing has been proposed for P2M transactions, person-to-person (P2P) transfers on Raast remain free and outside the scope of the recommendations.
