Review of the SBP Annual Payment Systems Review, FY 2025–26

1. Purpose and Scope

This review examines the State Bank of Pakistan’s Annual Payment Systems Review for FY 2025–26, covering the period from 1 July 2025 to 30 June 2026. Its purpose is to assess the report’s key findings, evaluate developments in Pakistan’s digital payments ecosystem, and identify gaps in the way payment activity, adoption, and infrastructure performance are reported.

Rather than simply summarising the statistics published by SBP, this review considers what the reported figures reveal about the changing payments landscape, where further explanation is needed, and how the quality of payment-system reporting could be improved.

2. Executive Summary and Key Findings

Pakistan’s retail payment system recorded substantial growth during FY 2025–26. Total retail transactions reached 14,297.5 million, compared with 9,072.6 million in FY 2024–25, representing an increase of approximately 58%. Their combined value rose to PKR 672.7 trillion from PKR 611.6 trillion, an increase of around 10%.

Digital payment channels accounted for PKR 257.1 trillion in transaction value, compared with PKR 178.6 trillion in the previous year. This represents growth of approximately 44%. Meanwhile, over-the-counter (OTC) transactions declined in value from PKR 432.9 trillion to PKR 415.7 trillion.

Digital channels accounted for 92% of retail payment volume, up from 88% in FY 2024–25 and 85% in FY 2023–24. Their share of transaction value also increased, reaching 38%, compared with 29% in the previous year.

Mobile phone-based channels remained a major contributor to this expansion, processing approximately 11.1 billion transactions, equivalent to 78% of total retail payment volume. This represented year-on-year growth of approximately 79%.

The report also highlights substantial growth in digital payment infrastructure. Registered QR-enabled merchants increased from 1.09 million to 3.84 million, while point-of-sale (POS) terminals reached 337,791. The number of e-commerce merchants stood at 23,356, and cash deposit machines (CDMs) reached 1,896.

Raast continued to expand, processing approximately 2.76 billion transactions worth PKR 80 trillion, compared with 1.276 billion transactions worth PKR 29.6 trillion in the previous year. This represents transaction-volume growth of approximately 116%.

These developments indicate a significant shift towards digital payment channels. However, the scale of reported growth also raises important questions about active adoption, transaction classification, infrastructure utilisation, and the extent to which increased digital activity is replacing cash-based transactions.

3. Major Strengths of the Report

3.1 Expansion of Digital Payment Channels

The report provides substantial evidence of the increasing role of digital channels in Pakistan’s retail payment ecosystem. The rise in digital transaction volume and value demonstrates the growing importance of mobile banking, internet banking, branchless banking, and other electronic payment methods.

The increase in mobile-based transactions is particularly significant. With mobile channels accounting for 78% of total retail payment volume, they have become a central component of everyday payment activity.

3.2 Growth in Payment Infrastructure

The expansion of QR-enabled merchants, POS terminals, and e-commerce merchant registrations reflects continued investment in digital payment acceptance infrastructure.

The increase in registered QR-enabled merchants from 1.09 million to 3.84 million is especially noteworthy. It suggests that digital payment acceptance is extending beyond traditional card-based infrastructure and becoming more accessible to smaller businesses.

3.3 Development of Raast

Raast's continued expansion is another major development highlighted in the report. Its transaction volume increased from 1.276 billion to approximately 2.76 billion, while transaction value rose from PKR 29.6 trillion to PKR 80 trillion.

This growth demonstrates the increasing relevance of Pakistan's instant payment infrastructure. The system's development also provides an important foundation for improving interoperability and reducing reliance on fragmented payment channels.

3.4 Modernisation of Financial Infrastructure

The report highlights the August 2025 ISO 20022 upgrade to PRISM+, reflecting progress in the modernisation of Pakistan's large-value payment infrastructure.

PRISM+ processed approximately 6.3 million transactions worth PKR 1,566 trillion during the year. This demonstrates the scale and systemic importance of the country's real-time gross settlement infrastructure.

4. Critical Analysis and Identified Gaps

4.1 Transaction Growth and Changes in Classification

One of the most important issues in interpreting the reported growth figures is the need to distinguish genuine increases in payment activity from changes in reporting classifications.

For example, branchless banking miscellaneous payments increased from approximately 201 million transactions in FY 2024–25 to 1,953 million in FY 2025–26. This represents an exceptionally large increase.

The report would benefit from explaining whether this growth reflects new payment activity, changes in transaction categorisation, improved reporting coverage, or the inclusion of previously unreported activities.

Without such clarification, readers may interpret the entire increase as organic growth in consumer payment behaviour.

4.2 Registered Accounts Versus Active Adoption

The report indicates that the number of accounts and wallets reached approximately 292.8 million, exceeding Pakistan's reported population of 241.5 million.

Although this demonstrates the scale of account availability, it does not necessarily indicate that the same number of individuals actively use digital financial services.

Multiple accounts, dormant wallets, and overlapping registrations can inflate account totals. A more meaningful assessment of financial inclusion would distinguish between registered accounts, active accounts, unique users, and regularly transacting customers.

SBP should consider reporting monthly and quarterly active-user indicators alongside account-registration figures.

4.3 Limited Analysis of Raast's Performance

Although the report provides substantial information on Raast's transaction growth, it does not fully evaluate the system's operational performance and contribution to financial inclusion.

For instance, the report could provide greater detail on:

• The distribution of transactions between person-to-person (P2P) and person-to-merchant (P2M) payments.
• The number of active users and participating institutions.
• The growth of merchant acceptance.
• Transaction success and failure rates.
• The extent to which Raast is replacing cash-based payments.

Such indicators would provide a more complete understanding of Raast's effectiveness beyond transaction volume and value.

4.4 Digital Payments and Continued Cash Dependence

Despite the expansion of digital payment channels, cash in circulation increased by approximately 12.3%, reaching PKR 11.9 trillion. ATM withdrawals also increased by approximately 12.3%.

This creates an important analytical question: is the expansion of digital payments reducing Pakistan's dependence on cash, or are digital and cash-based transactions growing simultaneously?

The report presents the growth of digital channels but does not sufficiently explore this relationship.

A more detailed analysis of cash withdrawals, cash deposits, digital payment frequency, and payment behaviour would help determine whether Pakistan is experiencing genuine cash substitution or simply an expansion of overall payment activity.

4.5 Discrepancies in Card Transaction Reporting

The report contains discrepancies between issuer-side and acquirer-side card transaction figures for Q4 FY 2025–26.

For example, Table B-16 reports 235.9 million ATM transactions and 139.3 million POS transactions from the issuer perspective. Table B-4, however, reports 271.9 million ATM transactions and 161.5 million POS transactions from the acquirer perspective.

Differences may arise from reporting scope, transaction treatment, or timing. Nevertheless, the report should explain these discrepancies so that readers can interpret the figures consistently.

4.6 Infrastructure Growth Versus Actual Utilisation

The increase in registered QR-enabled merchants from 1.09 million to 3.84 million is substantial. However, merchant registration alone does not establish that these businesses actively accept digital payments.

For example, approximately 297 million QR payments were recorded during the year. Dividing this figure by 3.84 million registered merchants gives an average of roughly 77 transactions per registered merchant annually.

This is only an indicative calculation because registered merchants may not all have been active throughout the year, and transaction distribution is unlikely to be uniform. Nevertheless, it highlights why infrastructure expansion should be accompanied by utilisation indicators.

Reporting active merchants, average transaction frequency, and merchant retention would provide a more meaningful assessment.

4.7 Evaluation of Regulatory Developments

The report discusses several regulatory and institutional developments, including the regulatory sandbox, the Payment Systems Framework, and the designation of 1LINK as a Designated Payment System.

However, it could go further by evaluating the practical outcomes of these initiatives.

For example, reporting on sandbox outcomes, implementation progress, consumer protection improvements, and the adoption of regulatory requirements would help establish whether these developments have translated into measurable improvements in the financial ecosystem.

5. Recommendations

Based on the findings and limitations identified above, the following improvements could strengthen future editions of the SBP Annual Payment Systems Review:

1. Improve transaction classification transparency: Clearly disclose changes in reporting definitions, institutional coverage, and transaction categories to support meaningful year-on-year comparisons.
2. Introduce active-user indicators: Report monthly active users, active accounts, dormant accounts, and unique customers to provide a more accurate picture of digital financial inclusion.
3. Expand Raast reporting: Include transaction segmentation, active-user statistics, merchant adoption, transaction success rates, and system utilisation indicators.
4. Analyse cash and digital payment trends together: Examine whether digital payment growth is replacing cash transactions or occurring alongside continued cash dependence.
5. Improve statistical consistency: Reconcile differences between issuer-side and acquirer-side card transaction figures and provide explanations for discrepancies.
6. Measure infrastructure utilisation: Distinguish between registered and active merchants, terminals, and payment acceptance points.
7. Strengthen regulatory outcome reporting: Provide measurable assessments of regulatory initiatives, sandbox outcomes, and their impact on payment-system efficiency and financial inclusion.
8. Improve report accessibility and presentation: Define technical acronyms, maintain consistent terminology, and correct editorial errors to make the report easier to interpret.

6. Conclusion

The State Bank of Pakistan's Annual Payment Systems Review FY 2025–26 documents substantial growth in Pakistan's digital payment ecosystem. The expansion of mobile-based transactions, QR-enabled merchants, POS infrastructure, and Raast reflects an increasingly digital financial environment.

However, transaction growth and infrastructure expansion should not be treated as complete measures of digital financial inclusion. Meaningful adoption also depends on active usage, accessibility, transaction reliability, merchant participation, and the extent to which digital payments become an effective alternative to cash.

The report provides a valuable statistical foundation for understanding Pakistan's evolving payment landscape. Future editions could strengthen this contribution by placing greater emphasis on data transparency, active adoption, infrastructure utilisation, and measurable regulatory outcomes.

A more comprehensive approach to payment-system reporting would allow policymakers, financial institutions, researchers, and other stakeholders to distinguish between numerical growth and meaningful progress towards a more inclusive, efficient, and digitally integrated financial ecosystem