Bank transfers and wire transfers are some of the most popular payment methods in Pakistan. Recently, mobile banking has skyrocketed, and several digital payment apps have been launched to facilitate the growing Pakistani consumer base.
Though banking in Pakistani is a major industry, only around 25% of the population is banked. The reason for the low penetration of banking among the population is the huge reliance on cash for most Pakistanis.
Online banking is steadily on the rise in the country as more and more people continue to join the digital banking age. Several mobile apps have also been launched recently to cater to Pakistan’s growing population of digital users.
This article lists the 12 most popular payment methods in Pakistan and discusses why some methods are preferred over others.
Payment Methods in Pakistan
Mobile banking is steadily on the rise in Pakistan; however, most people still use pay orders, demand drafts, and wire transfers for their daily transactions.
For decades, cash has been the only major payment method in Pakistan. In recent years, with the surge of ecommerce and online payments, several new modes of payment in the country have become available.
1. Bank Transfer/Wire Transfers
Bank transfers are one of the most trusted and used modes of payment among Pakistanis.
Users usually visit their bank branches and fill out forms, after which they can deposit the amount in a bank account.
With a large portion of the population heavily reliant on this conventional banking mode, payment issues and long cues are not an uncommon sight at banks, especially in the less connected areas of the country.
Wire transfers allow users to send and receive money from any bank account in the world. Users can use the IBAN of any bank account and use it to for transactions. Banks use SWIFT codes to transfer money from their accounts to a bank account in another country or city.
Pakistani freelancers use wire transfers to receive payment from their international clients directly to their bank accounts.
2. Debit/Credit Cards
ATM debit cards are also one of Pakistan’s most used payment modes. Users who open a bank account with any major commercial bank in Pakistan can apply for a debit card for their daily use.
Several payment gateways, such as Visa, Mastercard, and UnionPay, have partnered with local Pakistani banks to issue their supported debit cards to users. Visa or Mastercard-supported debit cards allow international payments and purchases to the users.
PayPak is the local alternative to Visa and Mastercard and allows seamless payments at any POS across the country.
Credit cards are less common and popular than debit cards due to their involvement with interest which is frowned upon in Pakistan. Several major banks do offer this facility to their users. Around 3.7% percent of all the bank cards issued in Pakistan are credit cards.
3. Pay Order/Demand Draft/Cheques
A large number of businesses, especially SMEs, largely operate via paper-based payment methods in Pakistan. Some of the most popular ones are:
- Pay Orders
- Demand Drafts
Pay orders are payment methods allowing users to send money to any institution, individual, or government agency for various reasons. A pay order is also called a “Banker’s cheque” and can only be used for local payments within the same city.
Demand drafts are negotiable instruments allowing users to send money outside their city. Once the payment is made, the receiver can cash out the payment by showing the instrument to the bank.
Cheques are extremely popular in Pakistan. Businesses and individuals usually issue cheques to their employees or contractors to make payments. These cheques are either crossed cheques, which can only be deposited into the holder’s account to avoid scams or stealing, or order cheques that can be cashed out.
Various organizations and governmental bodies issue vouchers that users use to make payments. These vouchers must be deposited in the respective bank branches and the required amount.
4. Cash Agents/Merchants
Ecommerce merchants registered more than 75% growth in 2021 in Pakistan. These merchants are small businesses or shop owners registered with some of the most popular microfinance platforms, such as JazzCash, UBL Omni, and Easypaisa.
Users can visit merchants close to their location and make transactions by paying them cash. Bill payments, money transfers, and mobile packages are some of the features of merchant payments.
JazzCash is one of the leading microfinance banks in Pakistan. It started in 2012 as a direct competitor to Easypaisa and has now become the leading digital bank by the number of transactions far ahead of its competitors.
Users can use the JazzCash app to make payments, pay bills, book tickets, and pay fees, among several other services. You can easily send payments to any JazzCash or other bank accounts within the country via the bank transfer feature of the app.
JazzCash also allows its users to order debit cards which can be used to make local POS payments and withdraw funds from any ATM.
Easypaisa is one of the largest digital banks in the country. It was the pioneer of digital banking in Pakistan at the time of its introduction in 2009. The mobile bank has the highest number of agents nationwide.
Users can open a basic banking account with Easypaisa and use it for a variety of services, including payments. Like JazzCash, Easypaisa allows its users to obtain ATM debit cards for local transactions. These cards cannot be used for online payments as Visa or Mastercard do not support them.
All you need to open an Easypaisa account is your mobile number and your CNIC.
Payoneer is a US-based digital bank that allows users to create and manage their virtual bank accounts. With Payoneer, you can create accounts in multiple currencies, making it one of the preferred choices of freelancers.
Pakistani freelancers use Payoneer to receive an international payments from their clients across the globe. Users can then transfer their earnings directly to their local bank accounts.
Payoneer also allows users to order an ATM debit card supported by Mastercard. This card can be ordered in any available currency and used for online payments, and users can also use this card for ATM withdrawals.
Payoneer has partnered with JazzCash to facilitate freelancers in Pakistan by allowing them transactions in small amounts directly into their JazzCash accounts.
8. HBL Konnect
HBL Konnect is a digital banking app launched by HBL bank. This basic banking app provides users with several features, such as bill payments, mobile top-ups, Kuickpay payments, and money transfers, among other options.
Much like Easypaisa and JazzCash, HBL Konnect has several agents scattered across the country. Users can open a Konnect account by downloading the app or visiting any agent.
Sadapay is a new addition to the Pakistani microfinance banking industry. It was launched in 2020 and served as a single payment system. It also offers its users free ATM debit cards. However, what sets Sadapay’s bank cards is that they are vertical, which is the first of its kind in Pakistan.
These debit cards do not have the traditional 16-digit number written, and users can see the card number from their Sadapay app.
The app is still relatively new and offers limited features. One of the best things I have experienced with Sadapay is that the digital bank does not charge an ATM withdrawal fee on the first three transactions, which I believe is a fantastic feature.
Sadapay debit cards are supported by Mastercard, allowing users to make international payments and receive money from across the globe.
Like Sadapay, Nayapay is a digital banking platform that allows users the freedom to perform basic banking transactions without visiting a bank. It was launched in 2019 and had a wider variety of features compared to Sadapay.
Nayapay also allows its users to order ATM debit cards, both virtual and physical, which can be used for international payments and transactions. You can also use your Nayapay account to receive money from anywhere in the world via your IBAN.
Nayapay debit cards are supported by Visa.
11. Keenu Wallet
Keenu Wallet was launched in 2016 by Wemsol Private Limited as a digital payments app aimed to revolutionize the Pakistani mobile banking industry. The application offers users money transfer, bill payment, and mobile top-up facilities.
Though it started great, the microfinance bank has failed to grab a significant share of the digital banking market.
UPaisa was launched in 2013 by Ufone to provide its users with a one-stop solution for their banking needs. Users can create a UPaisa wallet by downloading their application and creating a profile.
The mobile bank also has a network of UPaisa retailers, which allow users to send and receive money from anywhere in the country.
Other Important Information
There are other applications and platforms where payments can be made. However, these platforms are not used much. Hawala is an unofficial and illegal means of money transfer used by thousands of overseas Pakistanis to send money home.
The list mentioned above includes all the major payment methods in Pakistan. New apps and mobile banks are being introduced regularly, making the future of digital banking in Pakistan bright.
Some of the other modes of payment in the country are given below.
Savyour is Pakistan’s biggest cashback platform, allowing users to attain cashback by spending on their favorite retailers and restaurants. The platform has collaborations with more than 500 brands giving users a large variety of options.
Once the users have enough money in their Savyour cashback wallet, they can easily withdraw the money in their bank account or via Easypaisa and JazzCash.
Crypto wallets have recently become popular globally due to the rise and fall of Bitcoin in the past few years. Though not many cryptocurrency exchanges are in Pakistan, some operate on a small scale.
Users can send and receive different cryptocurrencies in their wallets via P2P transfers from other crypto users across the globe.
One of the major modes of money transfer in Pakistan and other countries is Hawala. This method of payment is illegal but operates unofficially in the black market.
This system is mainly used by Pakistanis living abroad to send money home to their families. Some individuals who want to avoid taxes use these informal channels to send and receive money instead of conventional bank transfers.
The Hawala system exchange rates are significantly lower than the mid-market rates. For example, if $1 = Rs. 220 in the official channels, the exchange rate under the Hawala would be $1 = 240 or more, depending on the demand for the currency. This system is actively used for money laundering as no money trail is involved, and the transactions work via promissory notes.
Though there are a variety of payment methods in Pakistan, cash is still king in the country. Some of the widely used payment platforms are bank transfers, pay orders, demand drafts, and mobile banking.
Several mobile apps, such as Easypaisa and JazzCash, have attracted millions of users across the nation, enabling them to use online banking for their daily needs. These apps are paving the way for a more connected and digital Pakistan, which will help drastically increase the banked population’s percentage.