Introduction Over a billion people in developing Asia are unbanked, including a significant number in Pakistan, where only 21% of adults have access to a bank account or mobile money provider. Many depend on informal networks for financial transactions. Financial exclusion hits women worse than men, who are only half as likely as men to have access to banking services. Digital finance presents a major opportunity to bridge this gap, offering faster, safer, and more accessible transactions. Encouraging merchant adoption, investing in financial innovation, strengthening consumer protection policies, and promoting inclusion efforts are essential to building trust, boosting adoption, and unlocking the country’s potential for digital finance. Analysis The role of mobile money in financial inclusion Mobile money offers huge potential to improve lives by enabling low-cost, fast, safe, and easy transactions. It addresses access barriers by eliminating the need to go to physical bank branches. In 2022, Pakistan had only 10.8 commercial bank branches per 100,000 adults—one of the lowest ratios in the region. Pakistan’s evolving financial landscape Over the past 15 years, financial services in Pakistan have evolved rapidly. Financial institution accounts grew by about 127% between FY19 and FY24. Of Pakistan’s 241 million people, 60% are adults. With 91 million unique financial institution accounts, two-fifths of the adult population still lack access to formal financial services. Deregulation in the sector led to new branchless banking regulations. This enabled kiryana convenience stores across the country to offer financial services. The coronavirus (COVID-19) pandemic shifted consumer behavior and further accelerated mobile and cashless banking adoption. Mobile and online transactions rose from 17% in early 2020 to 75% by September 2024, per the State Bank of Pakistan (SBP). Raast, the country’s first instant payment system launched in 2021, has also simplified person-to-person (P2P) and person-to-merchant (P2M) transactions. This system offers instant, reliable, and free digital payments for individuals and businesses within Pakistan. Users can send or receive money using their mobile numbers and bank accounts. This has extended financial services to the poor and the unbanked. Adoption has surged, with Raast processing over 102 million P2P payments in 2023, up from 7.9 million in 2022. By the end of September, daily transactions had reached 3 million, and there were 39.5 million registered Raast IDs, according to public data from the State Bank of Pakistan. Raast also revolutionized businesses, especially small and medium enterprises and the retail sector, with P2M transactions introduced in February 2022. This reduced fees and settlement times, enhancing efficiency and boosting economic activity. Lessons from India and PRC Lessons from regional giants like India and the People’s Republic of China (PRC) highlight the transformative potential of digital payment systems. India’s Unified Payments Interface (UPI), introduced in 2016, processed 117.6 billion transactions in 2023, making it the world's most popular alternative payment method. While P2P transactions initially drove its adoption, the widespread acceptance of P2M payments accelerated its growth. Similarly, PRC’s tech giant Alipay began with P2P transfers in 2004, followed by WeChat Pay in 2013. Exponential growth and near-universal adoption came after the introduction of P2M capabilities. The retail sector’s untapped potential Pakistan’s robust retail sector, which makes up almost 18% of GDP and is spread across a network of an estimated 2.5 million retail and wholesale outlets, offers an immense opportunity for growth. Traditionally, this sector has remained largely untaxed, contributing an estimated 4% of tax revenue. But recent pressure from the International Monetary Fund (IMF) has renewed the government's drive to get the retail sector to pay more through taxation. To that end, several measures have already been taken, including the implementation of point-of-sale registers and the Tajir Dost scheme, where retailers are subject to a fixed monthly tax. The tax assessment is based on the market value and regular turnover of the enterprise. In 2024, the scheme was extended to 42 cities in Pakistan from the original six. Under the scheme, businesses can declare their assets and income and potentially receive benefits like reduced tax rates and simplified tax compliance procedures. Implications Challenges in achieving full digital adoption Digital financial services in Pakistan are growing, but full adoption is still a work in progress. A supportive policy and regulatory environment are important to growing the digital financial sector and extending it, particularly to rural and underbanked regions. The government and regulatory authorities must move quickly to establish frameworks that address cost barriers, promote trust, incentivize adoption, and ensure interoperability while protecting consumers and businesses. Encouraging merchant and consumer adoption Authorities should also encourage merchants to adopt digital payments by offering working capital loans based on steady, digitally documented financial performance. Financial institutions must step up with innovative products and solutions, such as tap-and-pay or buy-now-pay-later (BNPL) schemes, to promote retailer adoption. Government leadership in advancing digital finance Moreover, the government can lead by example, using digital methods for tax payments, pensions, and other services. Digital ID systems can also facilitate account access. More policies that promote trust in the digital economy, such as those on data privacy, cybersecurity, and consumer protection, must be prioritized. Currently, fewer than half of developing Asian countries have robust data protection laws. Regional coordination is also limited, making it hard for individuals and businesses alike to know what regulations apply when their data moves across borders. Bridging the gender gap in financial services Efforts to improve women’s financial inclusion must be strengthened as well. With over half the population still underserved by formal financial systems, targeted efforts are essential to bridge this gap. The Asian Development Bank (ADB) is implementing the Women Inclusive Finance Sector Development Program (WIFSDP) to boost financial inclusion for women through comprehensive reforms in policy, regulatory, and institutional frameworks. ADB is supporting the State Bank of Pakistan in training and deploying more women branchless banking agents in rural and remote areas, improving access for underserved populations. Resources Data2X. 2022. Towards Women's Financial Inclusion: A Gender Data Diagnostic of Pakistan. G. S. Arain. 2024. Pakistan’s NFIS Initiatives Leverages Digital Identity for Financial Inclusion. Biometric Update. 1 May. M. Ali. 2024. Catapulting into a Cashless Society. Dawn. 4 November. State Bank of Pakistan. Payment Systems Department Quarterly Reports (accessed 20 May 2025). Ask the Experts Shauzab Ali Principal Project Officer (Financial Sector), Sectors Department 3, Asian Development Bank Shauzab Ali has more than 30 years of experience in financial sector development, banking, capital markets, and public policy. He currently leads financial sector initiatives at the Asian Development Bank, focusing on regulatory reforms, digital finance, and infrastructure financing in Pakistan. Previously, he served as a commissioner at the Securities and Exchange Commission of Pakistan, where he spearheaded transformative capital market reforms, digital investor onboarding, fintech regulatory sandboxes, and governance improvements in stock exchanges. Murtaza Ali President, JazzCash Murtaza Ali is the President of JazzCash, Pakistan’s largest fintech platform. With more than 25 years of experience in financial services, digital payments, and business strategy, he is passionate about expanding digital financial access to every Pakistani, including youth, women, MSMEs, and freelancers, with a strong focus on the unbanked and underbanked. Asian Development Bank (ADB) The Asian Development Bank is a leading multilateral development bank supporting sustainable, inclusive, and resilient growth across Asia and the Pacific. Working with its members and partners to solve complex challenges together, ADB harnesses innovative financial tools and strategic partnerships to transform lives, build quality infrastructure, and safeguard our planet. Founded in 1966, ADB is owned by 69 members—49 from the region. Follow Asian Development Bank (ADB) on Leave your question or comment in the section below: View the discussion thread.