According to a recent assessment by the Better Than Cash Alliance, a group connected to the UN, Pakistan has a huge potential to guide its micro, small, and medium companies (MSMEs) into the digital era. The State Bank of Pakistan and the Pakistani Government collaborated on this paper, which emphasizes the critical role that digitization has played in the inclusive economic growth of Pakistan.
Small business fortunes and the fates of national economies are interwoven. Due to their disproportionate reliance on cash transactions, Pakistan’s MSMEs, which make up 90% of all businesses and almost half of the GDP, constantly confront difficulties. Their reliance on cash restricts both their ability to transact and their possibilities for future growth.
A significant growth opportunity is provided by merchants’ responsible embrace of digital payments. These digital payments have a track record of increasing women’s economic involvement and aiding in the accomplishment of the Sustainable Development Goals set forth by the United Nations. Additionally, digital payments can help Pakistan overcome some of its biggest economic difficulties. In especially for female businesses, digitization encourages financial inclusion, enables equal access to formal financial services, improves operational workflows, lowers expenses, and lessens mobility restrictions. Adapting digital payment systems to female clients’ needs represents a sizable business opportunity, with a total market value of about USD $650 million in the United States.
The State Bank of Pakistan is commended for its bold leadership in pushing responsible payment digitisation for merchants, with a specific focus on women merchants, by Dr. Ruth Goodwin-Groen, Managing Director of the UN-based Better Than Cash Alliance. The digitization of merchant payments has accelerated MSME expansion throughout Asia, resulting in broader economic gains. The coalition is keen to continue working together because the opportunity to advance women merchants’ financial equality in Pakistan is now.
In keeping with the objectives established in the National Payments System Strategy, the paper estimates that national adoption of digital payments in Pakistan by 2025 may increase GDP by 7%, lead to the creation of four million jobs, and bring in an additional USD 263 billion in deposits.
Among other important recommendations, the research highlights the significance of active participation from all significant public and commercial sector stakeholders to foster trust in digital payments, make them more inexpensive for MSMEs, and encourage adoption through measures like lowering sales tax rates.
