Pakistan’s digital merchant base has grown so fast that the government says it can no longer track it manually. Officials have proposed building a centralized merchant database to give regulators real-time visibility into digital transactions a plan discussed at a high-level Finance Division review meeting on September 2, 2026, held to prepare for an upcoming review of the Prime Minister’s Cashless Economy Initiative.
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Key Takeaways
- What’s proposed: A centralized, unified database of digital merchants nationwide, giving regulators real-time transaction visibility
- Meeting held: September 2, 2026, chaired by Minister of State for Finance Bilal Azhar Kayani at the Finance Division
- Purpose of the meeting: Preparation for the Prime Minister’s upcoming Cashless Initiative review
- Officials involved: State Bank of Pakistan (SBP), NADRA, the Capital Development Authority, the Ministry of IT and Telecommunication, and private-sector representatives
- Merchant growth driving the proposal: Active digital merchants rose from roughly 500,000 in June 2025 to more than 2.03 million by June 2026, surpassing the government’s 2-million target
- Annual digital transactions: Climbed from 6.9 billion to 11.3 billion over the past year
- Digital banking users: Crossed 135 million
- The remaining gap: Pakistan’s total retail merchant universe is estimated at 4–5 million outlets, meaning 2–3 million merchants still haven’t gone digital
- Cash still dominates overall economic activity: More than 85% of the country’s transactions are still conducted in cash, with an estimated Rs11.2–11.3 trillion circulating outside the formal banking system
What Was Actually Discussed
The proposal emerged from a review meeting chaired by Minister of State for Finance Bilal Azhar Kayani at the Finance Division, called specifically to take stock of the Cashless Pakistan Initiative ahead of an upcoming review by Prime Minister Shehbaz Sharif. The session drew officials from across Pakistan’s digital finance and identity infrastructure SBP, NADRA, the Capital Development Authority, the Ministry of IT and Telecommunication, and private-sector representatives reflecting how many different institutions now have a stake in the cashless agenda.
Committee members reviewed the past year’s growth across active digital merchants, digital transaction volumes, and digital banking users, and used that review to set annual performance targets for the national Cashless Dashboard for the current fiscal year, alongside new analytical indicators meant to improve real-time monitoring and data transparency. The meeting also assessed progress on digitizing government payments across state-owned enterprises and autonomous bodies, reiterating the goal of fully digitizing all vendor, employee, and pension payouts.
Why a Database, and Why Now
The reasoning behind the proposal is straightforward: monitoring two million merchants manually is a fundamentally different problem than monitoring 500,000. Pakistan’s active digital merchant base has effectively quadrupled in a single year, and that scale of growth has evidently outpaced the government’s existing ability to track, verify, and support merchants individually. A centralized database is meant to solve that specific coordination problem giving regulators a single, authoritative source of merchant data rather than fragmented records spread across different banks, wallets, and payment providers.
There’s also a clear tax-compliance dimension to the proposal, even if it wasn’t the meeting’s stated headline purpose. Because NADRA already holds biometric identity data on every citizen, a merchant registry linked to CNIC records could make it considerably harder for sellers to remain undocumented directly complementing FBR’s separate, ongoing push toward AI-powered tax administration and NADRA-cross-referenced audit targeting.
The Numbers That Explain the Urgency
Merchant growth has been dramatic and still incomplete. Active merchants accepting digital payments rose from roughly 500,000 in June 2025 to more than 2.03 million by June 2026, surpassing the government’s two-million target. But Pakistan’s total retail merchant universe is estimated at 4 to 5 million outlets, meaning even after this rapid growth, 2 to 3 million merchants still haven’t made the transition to digital payment acceptance.
Transaction volume has grown too, though less dramatically than merchant count. Annual digital transactions climbed from 6.9 billion to 11.3 billion over the past year strong growth, but a more modest multiple than the fourfold jump in merchant numbers, suggesting many newly onboarded merchants are still processing relatively low transaction volumes individually.
Cash still dominates the broader economy. Despite all this digital growth, more than 85% of the country’s transactions are still conducted in cash, with an estimated Rs11.2 to 11.3 trillion circulating entirely outside the formal banking system. This figure is worth distinguishing carefully from SBP’s often-cited statistic that 92% of retail transactions processed through the formal banking system are digital that 92% figure describes activity within the banking system specifically, while the 85%-cash figure describes Pakistan’s total economic transaction activity, including cash that never touches a bank or digital wallet at all. Both figures are accurate; they’re simply measuring different denominators.
A Specific Near-Term Target: Government Entities by December 2026
Alongside the merchant database proposal, the broader Cashless Initiative review has separately flagged a specific milestone: 25 high-impact federal and provincial entities have been identified for complete digitization through Raast by December 2026. This matters because government payment flows salaries, pensions, subsidies, tax refunds, and procurement payments represent some of the largest individual transaction categories in Pakistan’s economy. Routing these through Raast would create a documented, auditable record of public finance flows that cash and cheque-based systems simply cannot provide. That said, full digitization of a government entity involves system integration, staff training, and regulatory compliance work that typically takes longer than external deadlines anticipate making this December 2026 target a genuinely ambitious one.
Why This Matters
- It’s a direct response to Pakistan’s own success creating a new scale problem. The proposal exists specifically because merchant digitization worked faster than expected a rare case of a policy target being outpaced by actual adoption rather than falling short of it.
- It connects tax compliance and payments infrastructure more explicitly than before. A CNIC-linked merchant database would give FBR meaningfully better visibility into previously undocumented retail activity, reinforcing the same institutional logic behind FBR’s separate AI-driven tax administration reforms.
- It reflects continued cross-institutional coordination on Pakistan’s digital finance agenda. SBP, NADRA, the Capital Development Authority, and MoITT all being represented at the same review meeting echoes a similar pattern seen at the recent Pakistan Fintech Forum IV, where SBP, the Pakistan Digital Authority, PVARA, and Raast shared a stage suggesting a deliberate, if still evolving, push toward coordinated rather than siloed digital finance governance.
- It’s a reminder that “cashless” claims require careful denominators. The coexistence of a 92% formal-system digital payment rate and an 85% economy-wide cash rate illustrates how easy it is for headline statistics about Pakistan’s cashless progress to be technically accurate but easily misread without the right context.
Frequently Asked Questions
What is Pakistan’s proposed centralized merchant database?
A unified national database of digital merchants, proposed to give regulators real-time visibility into digital transactions and support Pakistan’s broader push toward a cashless economy.
Who proposed this database?
It was discussed at a Finance Division review meeting on September 2, 2026, chaired by Minister of State for Finance Bilal Azhar Kayani, with officials from SBP, NADRA, the Capital Development Authority, and the Ministry of IT and Telecommunication.
How many digital merchants does Pakistan currently have?
More than 2.03 million as of June 2026, up from roughly 500,000 in June 2025 surpassing the government’s 2-million target.
How many merchants in Pakistan still aren’t digital?
An estimated 2 to 3 million, out of a total retail merchant universe of roughly 4 to 5 million outlets.
Is Pakistan’s economy actually cashless yet?
No. While 92% of transactions processed through the formal banking system are digital, more than 85% of Pakistan’s total transactions economy-wide are still conducted in cash, with an estimated Rs11.2–11.3 trillion circulating outside the formal banking system.
What other digitization targets were discussed at the meeting?
A goal of fully digitizing all vendor, employee, and pension payouts across state-owned enterprises and autonomous bodies, and a separate target of fully digitizing 25 high-impact government entities through Raast by December 2026.
Why would a merchant database help with tax compliance?
Because NADRA already holds biometric identity data on citizens, linking a merchant registry to CNIC records could make it significantly harder for sellers to remain undocumented for tax purposes.
