Despite rapid growth in fintech adoption, Pakistan’s digital payments ecosystem continues to face structural challenges, with frequent card transaction failures, restrictions on international payments, and low digital trust undermining user confidence, according to industry experts.
Business leaders say fragmented payment gateways, regulatory bottlenecks, and cautious risk frameworks are creating friction for both consumers and merchants. While adoption has increased, execution gaps remain a major hurdle to scale and reliability.
U Microfinance Bank President and CEO Tooran Asif said Pakistan has made meaningful progress in digital payments, but challenges now lie less in user uptake and more in fragmented systems and conservative risk controls. These issues often result in card declines, limited international payment access, uneven merchant acceptance, and lingering security concerns.
Asif noted that transaction failures could be reduced through stronger coordination between issuers and networks, alongside risk-based 3D Secure authentication. He also suggested replacing blanket international payment restrictions with use-case-based foreign exchange limits to support legitimate activities such as e-commerce, subscriptions, education, and freelancing.
Improving merchant enablement across local gateways, introducing smart payment routing, and strengthening consumer protections through faster dispute resolution and clearer chargeback rights could significantly improve trust, he added. These changes, he said, require operational refinement rather than heavy infrastructure investment.
Analyst Jamil Arif said Pakistan needs a “grand bargain” to unlock a seamless digital payments experience, starting with tax rationalisation for small merchants and mandatory open banking APIs. He stressed the importance of industry collaboration to establish a centralised fraud management system and reduce reliance on transaction subsidies.
Arif added that while digital channels now account for a large share of retail transactions, weaknesses in banking systems and internet connectivity continue to limit scalability, reinforcing Pakistan’s persistent cash-based behaviour.
