Pakistan's retail payments through formal banking channels rose to 14.3 billion transactions worth Rs673 trillion in the fiscal year ended June, with digital channels making up more than 92 per cent of the total, the central bank said on Tuesday. Retail payment transaction volumes in Pakistan rose 58 per cent in FY26, while value increased 10 per cent, the State Bank of Pakistan (SBP) said in its Annual Payment Systems Review.

Retail payments are routine, mostly lower-value transactions by individuals, merchants and businesses, and are distinct from the large-value transfers settled through systems such as PRISM+, the central bank said. Pakistan's payments ecosystem has undergone significant transformation over the last few years. The SBP attributed the shift to affordable digital technologies, wider access to banking services, changing customer preferences, greater interoperability and an enabling regulatory environment.

"The growing adoption of mobile phone banking continued to be the most important driver of digital payments," the SBP's report said. Mobile phone channels offered by banks, branchless banking operators and electronic money institutions handled 11.1 billion transactions during the year, a 79 per cent increase in volume, compared with growth of 52 per cent in the previous year. Internet banking recorded more than 0.3 billion transactions worth Rs61 trillion, up 15 per cent in volume and 55 per cent in value.

The central bank's report said the Prime Minister's Cashless Pakistan Initiative and Raast, the country's instant payment system, are key catalysts for the country's transition towards a more digital and cashless payments ecosystem, with incentives driving greater use of Raast, particularly for merchant and government payments. Under the initiative's subsidy programme, the number of QR-enabled merchants more than tripled to 3.8 million by the end of June 2026 from 1.1 million a year earlier.

The point-of-sale (POS) network expanded 49 per cent to 337,791 merchants, largely due to the introduction of Soft-POS by a few acquiring banks, the SBP said. Daily card payments at POS outlets reached nearly 1.5 million, up from one million in FY25. E-commerce merchants increased to 23,356, with account- and wallet-based payments making up almost 96 percent of e-commerce transactions processed through banks.

The number of ATMs rose 7 percent to 21,678, while cash and cheque deposit machines nearly doubled to 1,896. Branchless banking mobile 1 million, while banks' mobile 4 million, highlighting the continued shift of everyday banking activities towards smartphone-based platforms. A major development in payment infrastructure was the introduction of PRISM+ in August 2025, marking the transition of the RTGS system to the ISO 20022 standard.

The upgraded platform is designed to improve efficiency, transparency, and security of payment processing across retail and large-value segments. The digital share of payments by value rose to 38 percent in FY26 from 29 percent in FY25. Digital payments by value climbed to Rs257 trillion from Rs179 trillion, though the SBP said there was significant scope to deepen the adoption of digital payments in value-based transactions."This would require continued efforts to facilitate the digitisation of higher-value transactions across businesses, government entities, and financial institutions," it said.