Prior to the pandemic, the nation’s point-of-sale (POS) machine count was essentially unchanged. According to data from the State Bank of Pakistan’s most recent Payment Systems Quarterly Review, a POS machine processes payments using a credit or debit card rather than cash.
Covid-19 accelerated the nation’s use of digital technology. The economy reached a point where digitization to broaden the tax base was the only practical way to move forward due to the pandemic and the conflict between Russia and Ukraine. The fast rise in POS machines is evidence of the success of these measures.
In the first quarter of FY25, 83 million card-based transactions (5 percent of digital payments) were made at POS terminals, totaling Rs429 billion. According to the Payment System Review 1QFY25, the POS terminals collectively handle almost 900,000 in-store transactions per day.
Although QR code payments have been implemented in some locations, the report does not include a distinct section on them, probably because of their still-very-small contribution. POS terminals or mobile wallets like JazzCash and Easypaisa are typically used for digital consumer-to-merchant payments.
However, POS machines only account for a relatively small portion of the market in terms of volume and value. In terms of value, 1QFY25 saw transactions totaling Rs136 trillion, of which POS accounted for a pitiful 0.3 percent. At 4.3 percent, their portion of the roughly 2 billion transactions was marginally better.
The majority of monies transferred through formal channels, such as demand drafts, pay orders, or checks, make up around 54% of the total amount of payments, or Rs73 trillion.
Therefore, while digitization is happening, the increase figures are more due to the base effect than to a fundamental change in the way payments are made.
