The Push Toward a Cashless Economy in Pakistan
As Prime Minister Shehbaz Sharif leads the charge toward a cashless economy, the government faces significant hurdles. Despite ambitious goals, less than 700,000 retailers are currently using digital payment systems. This number becomes even more striking when we consider that only about 39,000 of these retailers are located in Islamabad.
During a recent briefing on this initiative, Sharif emphasized the importance of transitioning to a cashless economy, stating that it’s not just an economic shift but also a step toward sustainable development. The objective is to link at least 2 million merchants to digital payment platforms by June next year—a target that many see as optimistic given the resistance from the trading community.
A significant part of the push involves raising awareness, especially in rural areas where traditional cash transactions are deeply rooted. The government plans to ramp up campaigns to educate both traders and consumers about the benefits of digital payments. Not only does this align with global trends toward digitization, but it also aims to minimize corruption and enhance governance.
Interestingly, retailers have been the weakest link in Pakistan’s financial ecosystem. While the Federal Board of Revenue initially reported that traders paid around Rs693 billion in income tax last fiscal year, the FBR chairman later clarified that the actual number was only Rs166 billion. This disparity raises questions about transparency and accountability, particularly when considering that salaried individuals paid a whopping Rs606 billion in taxes during the same period.
As it stands, initiatives like linking mobile apps for government services with digital payments provide a glimpse of how the government envisions a seamless transition. New businesses require a digital payment setup for licensing, pushing more traders to adopt technology. Yet, challenges remain as companies are hesitant to embrace digital platforms fully.
On a positive note, Pakistan has already exceeded its target of 105 million digital service users, boasting around 112 million active users. This is a significant milestone, especially when considering how critical digital connectivity and financial inclusion are for economic growth.
The prime minister points to successful programs, such as the financial aid transfer via digital wallets during Ramadan, as evidence that this shift is not just theoretical but practically beneficial. The introduction of scannable codes for payment of utilities has also made strides in facilitating digital transactions.
Despite these advancements, PM Sharif believes that current targets for financial inclusion are not ambitious enough. He has instructed organizers to enhance efforts, particularly in promoting government-to-private-person digital payments, currently lagging at just 35%.
In conclusion, the move towards a cashless economy in Pakistan is both crucial and complex. While there are several initiatives underway—like activating 10 million digital wallets under the Benazir Income Support Programme—the road ahead remains challenging. Collective efforts from the government, traders, and consumers will determine how quickly and successfully the country can make this shift.
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