Every morning in Allama Iqbal Town, Lahore, Abdul Rehman opens his small grocery store early. For years, he would keep change in cash, worried that customers might walk away if he couldn’t offer them change. Every night, his mother worried about him getting home safely as he carried the day’s earnings in cash.

Today, most of his regular customers scan a QR code and pay him within seconds. He makes payments to his staff and suppliers digitally for the first time and even saves digitally. His story is a sign of hope for a cashless future in Pakistan.

Unfortunately, Abdul is not representative of the larger communities in Pakistan. His story reflects what the future could look like if we progress towards a truly cashless economy. Yet, there are multiple challenges on that path.

Despite significant efforts to digitize Pakistan’s economy, the country’s merchant and retail landscape remains largely dependent on cash. Only last year, Pakistan had over PKR 9.5 trillion cash-in-circulation.

In the recent past, Pakistan’s financial inclusion has risen to over 60 percent and now accounts for 4 percent of the world’s unbanked adult population, down from 9 percent in 2021. However, this includes only 15 percent rural inclusion, which reflects inequity in terms of digital finance penetration, limited to urban........

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