KARACHI: Many small and medium enterprises (SMEs) in Pakistan view digital payments as an essential investment for growth, citing benefits like faster processing, better security and increased convenience, according to Visa’s country manager for Pakistan and Afghanistan Umar S Khan.
“As an indicator of progress, our Value of Acceptance study finds that over half of the SMEs we surveyed have been accepting digital payments for more than two years,” Khan said in written responses to The News questions.
“Moreover, nearly 80 per cent of merchants within this segment believe digital payments are an important investment for the growth in their businesses owing to faster processing, enhanced security, as well as greater convenience for both them and their customers. This growing confidence in digital payments, particularly in card-based transactions, is accelerating the pace of adoption across the sector,” Khan said.
The comments from Khan came as Visa published the ‘Value of Acceptance’ study, which surveyed SMEs across Pakistan.About five million SMEs are operating in Pakistan, employing approximately 80 per cent of the non-agricultural labour force. These enterprises contribute around 40 per cent of the country’s GDP and 25 per cent of total exports. According to data from the SBP, only 155,000 SMEs -- equating to just 3.0 per cent -- currently receive financing from the banking sector. However, this is encouraging sign that these businesses are increasingly recognising the transformative potential of digital payments for their growth.
The State Bank of Pakistan’s (SBP) quarterly payment systems review as of March 2025 shows a 12 per cent increase in volume and a 28 per cent increase in value of digital payments.Khan said Pakistan’s accelerated shift towards a more mobile and digital economy presents a tremendous opportunity, particularly within the SME sector. There is an estimated $255 billion in SME B2B transactions, out of which a staggering 85 per cent are still cash-based. This makes the opportunity of adopting digital acceptance larger and more vital. So, digitising this space is not just an efficiency gain, it is an economic imperative.
According to him, global research also emphasises a compelling economic impact, underlining that transitioning from cash to digital payments can generate annual GDP gains of 1-2 per cent. A mere 5.0 per cent increase in digital payments per year for five consecutive years could reduce the informal economy by 11-13 per cent and boost tax revenue.
“At Visa, we are focused on enabling this transition to digital by giving SMEs access to our wide ecosystem of partners, innovative products, solutions, and global expertise,” he said.“Our rapidly expanding presence in Pakistan also underscores our dedication to the country's ongoing development. We are not only helping individual businesses thrive, but are committed to building a stronger, more inclusive digital economy in the country,” he added.
In response to concerns that security issues and complex onboarding processes hinder the wider adoption of digital payments, he noted that while cash may be prevalent, our study reveals that over 45 per cent of SMEs are worried about the risks of robbery associated with cash handling.
On the other hand, 45 per cent of respondents claim fraud concerns with card payments have been on the decline, which indicates that using robust technology would mitigate security risks and encourage a shift away from cash. The study highlights that the majority (53 per cent) of SMEs plan to invest in new payment technologies, he said.
“Prioritising security for more than 60 years, Visa has been staying several steps ahead of fraudsters and securing the digital landscape through advanced technology including artificial intelligence,” he said.
“This commitment has been especially evident over the past five years, with Visa investing more than $12 billion globally in technology, including measures designed to reduce fraud and enhance network security,” he added.
The study also lists complex onboarding processes as a hindrance to adoption. In such cases, simplifying policies, streamlining the onboarding process, and working with payment providers to improve the merchant experience can facilitate an easier transition for cash-only SMEs.
According to a report by Visa, despite 53 per cent of merchants expressing concerns about the costs associated with digital payments, a majority of surveyed SMEs still plan to invest in new payment technologies. This indicates a strong desire to innovate for the future.
