The card payments market in Pakistan is set to grow by 12.3% in 2021 with expected economic recovery from the COVID-19 pandemic. The growth will be supported by government’s financial inclusion initiatives and gradual improvement in payment infrastructure, says GlobalData, a leading data and analytics company.

According to GlobalData’s Payment Cards Analytics, the value of card payments in Pakistan grew at a CAGR 23.1% between 2017 to 2019. However, it registered a slower growth of 3.8% in 2020 due to decline in consumer spending amid the COVID-19 pandemic.

With the country now gradually recovering from the pandemic, consumer and commercial activities are gathering pace. As a result, the value of card payments is estimated to grow at 12.3% in 2021 to reach PKR546.6bn (US$3.4bn). It is forecasted to register a compound annual growth rate (CAGR) of 15.2% to reach PKR961.4bn (US$6.0bn) in 2025.

Nikhil Reddy, Payments Senior Analyst at GlobalData, comments: “The payment card market in Pakistan is still underdeveloped with just 15 cards per 100 inhabitants, compared to 63 in India and 683 in China. A large size of Pakistan’s population is still outside the purview of banking system.

“The central bank is making constant efforts to push electronic payments in the country. The introduction of low-cost bank accounts for lower-income groups, launch of domestic payment card scheme PayPak, and adoption of new technologies such as EMV and contactless are some examples. The current COVID-19 pandemic is also supporting this shift as consumers move from cash to non-cash payments to avoid getting infected.”

To improve card payment security and consumer confidence, the State Bank of Pakistan (SBP) in February 2021 passed a new law mandating banks to issue new cards based on EMV standard by 30 June 2021. In addition to this, to push card usage even for smaller value payments, the central bank has allowed PIN free payments for transactions up to PKR3,000 (US$18.67).

The central bank is also promoting the use of its domestic card scheme PayPak, which was launched in April 2016. The use of PayPak cards, which were earlier restricted for ATM cash withdrawals and POS payments, has been extended for e-commerce purchases in April 2021.

Mr Reddy concludes: “Card payments use is at a nascent stage in Pakistan. However, rising banked population, improving payments infrastructure and surge in e-commerce sales due to the COVID-19 pandemic is expected to push use of card payments over the forecast period.”