Is Pakistan ready to go cashless?
Published September 27, 2020

E-commerce in Pakistan has seen a steady rise, but many still distrust digital payments and online market places, preferring sticking to in-person transactions. But Covid-19 forced customers and businesses to give online shopping and payment solutions a chance, making even some sceptics see the benefits of cashless transactions. Now that lockdowns are lifting, will these new users go back offline?

“How often do you find yourself paying with cash, writing checks, or interacting with bond certificates?” begins a 2017 Inc magazine article, predicting that cash is on its way to becoming obsolete. Depending on where in the world one is based, the answer to the question above may well be, ‘rarely.’ In countries such as the US, apps including Venmo let one transfer money to friends and even instantly pay rent. People pay bills online. And services like Apple Pay are even making in-store shopping possible, without needing as much as a credit card.

But if asked when was the last time they paid for something with cash, most Pakistanis would say something like: ‘yesterday’; ‘this morning’; ‘an hour ago.’ Pakistan has been struggling to venture into e-commerce for years, but with little luck. That is, until Covid-19 introduced a new normal, and the country quickly began playing catch-up. While cash is certainly not on its way out in Pakistan, digital payment and online shopping have received an unexpected boost over the past six months. During this time, we’ve seen the opportunities digital payment options can provide and also the limitations of these solutions in Pakistan.

For better or worse, the Covid-19 outbreak left customers around the world with little option than to shop from their homes. From everyday-use items and groceries, to fresh produce, clothing, accessories and electronics, customers were forced to buy everything online as they stayed in.

DFresh, the fruits and vegetables channel on Daraz, saw an order uplift by nine times. Orders for hand sanitisers and liquid hand washes also increased by 18 times.

This shift was easier in other parts of the world. Perhaps this is why, amid the global pandemic, Jeff Bezos, the CEO and founder of Amazon, saw his wealth grow by 24 billion dollars. Walmart’s online sales also surged and their online sales in the US reportedly rose 74 percent in the first quarter alone.

But the Pakistani market is different. Efforts to bring customers online have not always yielded results and buyer behaviour has not changed much in the past. Who would have thought that a pandemic would make a diverse customer base — including all sorts of individuals, from youngsters who have been waiting for this for years to your chacha who deeply mistrusts the internet — turn to online shopping overnight?


According to an e-commerce index compiled by Daraz, one of Pakistan’s largest online stores, there has been a significant increase in digital payments and a rise in customers shopping online since the Covid-19 outbreak.

DFresh, the fruits and vegetables channel on Daraz, saw an order uplift by nine times. Orders for hand sanitisers and liquid hand washes also increased by 18 times. And, according to the report, “As customers practice social distancing and turn to in-home activities for entertainment, we have also seen an increase in searches for in-door games and gym equipment.”

This was clearly the time for Pakistani online retailers to shine. Foodpanda, an app-based food delivery service, introduced ‘contactless deliveries’ during the lockdown, where customers could pay online and the rider would leave the food at their doorstep. “We also offer a 15 percent discount on all pick-up [takeaway] orders that are paid online,” a representative from the company tells Eos.

GrocerApp, an online supermarket, has been around since 2016. While the app has seen its market grow consistently, they have found themselves in uncharted territory over the past six months. “In only a few days since the lockdown was imposed, we began getting three times the orders we were getting pre-Covid and it was challenging to cater to the high demand,” Ahmed Saeed, the CEO and co-founder of the app tells Eos.

In early lockdown days, the demand for fresh produce, groceries and even meat online was so high that big players also started exploring selling these products.

Built for the online space, these apps and websites had a clear advantage. But some businesses, that are giants in their own right, had to change course, fast. Islamabad-based Tehzeeb Bakers, a bakery with “a legacy of more than 100 years”, developed a website within a month and began taking online orders, allowing customers to shop from home. Their website replicates the sort of layout many eateries and grocery stores abroad use — it is simple, but serves its purpose.

By going digital, Tehzeeb has not only facilitated its customers but also highlighted the importance of being flexible when the market sees a sudden change. Of course, Tehzeeb had the resources to quickly pivot and go online, but even small businesses are now looking for affordable ways to go digital. As shopkeepers and small businesses struggled, many lacking the funds or technical know-how to start a website turned to social media.

During lockdown, while old institutions such as Tehzeeb started to rethink how to sell their products, older customers also began exploring options of buying online.


“We will be able to pay bills online, purchase groceries and do so much without bothering the kids to use their cards,” I hear my mum say to my dad a month into the lockdown. “It’s not safe to step out for every minor transaction,” she continues, attempting to convince my dad to finally return the bank’s call and get a debit card.

I am left stunned. Here she is, a 56-year-old, who is not the greatest fan of anything digital, making a case for digital payments.

It was then that I realised just how crucial digital payments were becoming during the lockdown. One wonders if these trends will continue now that strict lockdowns have been lifted.

My mum is not alone in her mistrust of e-commerce. While there may have been an increase in online sales, a sizable chunk of the customer-base is still uncomfortable using digital payments. Foodpanda is very popular in urban centres across Pakistan. Yet only 10 percent of its customers use digital payments; the number remained the same during the lockdown.

Every tip counts for riders like Rasheed, he says. “When people pay in advance, they almost never tip us, and we suffer.”

There are multiple reasons behind this. One is that many customers are a part of the informal economy and do not have their own bank accounts and debit/credit cards. Children and many women shopping do not have formal incomes that are debited to their bank accounts. They instead get mahana kharcha (monthly pocket money) from the breadwinner in the family.

What’s worse is that even people who are part of the formal economy and have access to online payment solutions are hesitant to avail them. GrocerApp’s Ahmed says that building a case for online shopping is a challenge in Pakistan because customers lack trust. “The early penetrators in e-commerce damaged customer trust by sending low quality or fake products to make more profits and it is taking a lot of effort to undo that.”

The damage, it seems, has been done. Madeeha Maqbool, a civil servant, tells Eos that she would rather transfer money to a business’ bank account directly rather than use a debit card. “I don’t want my card details stolen,” she says.

Of course, online fraud exists everywhere in the world. Ayesha Bano was a student in the UK when her debit card details were stolen and she lost a significant amount of money. This incident has left a lasting impact on Bano. She finds it difficult to trust digital payment options, even now that she is back in Pakistan.


Banks in Pakistan are well aware of these issues and have tried to introduce solutions. Most send out a One Time Pin (OTP) to the customer via text and/or email every time they make a purchase online. This is an effort to ensure that the customers’ debit cards are not misused.

At the same time, however, there are banks that do not allow digital transactions at all. Atiya Abbas, an activist in Karachi, tells Eos that she hates cash on delivery, but has no option because her bank does not offer digital payments. This was particularly an issue during the lockdown because she could not go to the ATM to get cash. “I shop a lot from small businesses and I have begun transferring money to them directly online, but we really need to go cashless as a society,” she says.

While customers who would like to live in a cashless Pakistan are still a minority, many who prefer cashless payments tend to be young women. This is because they often feel unsafe going to ATMs or even stepping out of the bank with cash in their purses.

To avoid all this, Zainab Zaheer, a SAP (systems, applications and products) consultant, shops online regularly and is comfortable using her debit card in most situations. “I only buy online from brands where I am comfortable taking the risk, and brands that are able to respond quickly, efficiently and clearly,” she says. “If I sense bad customer service, I do not order, or cancel my order. The only time I use cash-on-delivery is when a brand is not able to quickly and clearly communicate delivery schedules or tracking options.”

But brands that offer the kind of flexibility Zaheer is talking about are few. Unlike in other parts of the world, cash-back returns are practically impossible in Pakistan (although larger brands have made product exchanges quite smooth in the recent past). Even exchanging products can be a nightmare. If brands want the kind of loyalty customers show internationally, they must deliver the same flexibility too.

Some customers also complain that they would love to use their debit cards if there weren’t any glitches, and if using them were a pleasant experience.

Omar Parvez, an investment professional, says that even though the pandemic has forced people to shop online, it is going to take a lot of effort to encourage customers to start paying online. “Banking systems and digital transactions need to be smoother, debit cards should work well across all websites, mobile wallets need to tap into an even greater market and, at the same time, brands need to build trust too, so people are comfortable paying them before they have the product in hand.”


As online shopping saw a sudden spike during the lockdown, one thing that made things easier for customers was ‘cash on delivery’. While digital payments struggle to take off in Pakistan, even web- and app-based services have relied on this in-between option. Services such as Uber, that only accept digital payments around the world, tailor their offerings and allow Pakistanis to pay cash.

Many customers trust this option. But, on the flip side, some business owners think it is less than ideal. Misha Zia of Klotho, a small made-to-order clothing business, tells Eos that sometimes customers and courier companies “take advantage” of the option, and the biggest losers are small business owners. “As a result, we have stopped giving that option,” Zia tells Eos. “If customers want to purchase and they don’t have a debit card, they transfer the full payment online.”

In many ways, digital payments are convenient for both the purchaser and the seller — the seller gets the full payment before the product is dispatched, and the purchaser does not have to worry about being home to pay or keep cash in hand for the delivery. Yet, this option ends up costing the middlemen — delivery persons, who are already underpaid and continually exploited.

Abdul Rasheed, who works for a local courier company in Islamabad, tells Eos that most deliveries for the “elite sectors of the city” are paid for already and the receivers only need to sign to receive their package. “We suffer because of this, because we don’t get tips,” Rasheed says. “When people opt for cash on delivery, they leave the change with us, sometimes not necessarily to help us but also for their own comfort.” Every tip counts for riders like Rasheed, he says. “When people pay in advance, they almost never tip us, and we suffer.”

Similarly, Ali*, a Careem driver, says that he prefers customers paying with cash instead of cards. “Cards may be convenient for them and the company but, as drivers from humble backgrounds, we suffer,” he says. “Every tip contributes to our monthly expenses. For most of us, it is like a bonus that helps us cover additional expenses or pay for a treat for our children once in a while, so why would we want people to use cards?”


When thinking of digital payment solutions, we tend to think of people who have bank accounts, regular incomes and cards. But during the lockdown, people who are part of the informal economy also needed to access digital payment solutions and fund transfer services. For example, during strict lockdown, individuals working as labourers in big cities could not travel and see their families in their villages and needed to send money back to them. This is where services like EasyPaisa and Jazz Cash — that allow people to pay online through their cell phones or by simply going to a kiosk/outlet, without needing a debit/credit card — were especially useful.

For these ‘mobile wallets’, the pandemic proved to be an opportunity to expand. Jazz cash was already working with Pakistan Railways, Daraz, Careem and various other merchants, but the lockdown gave it an opportunity to grow further.

It seems that some customers who began shopping for groceries online due to the pandemic are now realising the convenience associated with it.

One of the many businesses that recently affiliated themselves with Jazz Cash is Mauqa Online, an online cleaning and maid service. Mauqa made accounts for their entire staff to ensure their payments can get to them digitally during the lockdown too. Given that none of their workers have bank accounts, this ease of cashless money transfer was a blessing.

Amid the lockdown, mobile wallets were not used for online shopping or bill payment alone. The Citizens Foundation recently distributed funds to vulnerable communities around Pakistan with Jazz Cash’s support. Similarly, in early April, Easy Paisa teamed up with the Zakat and Ushr Department of the Government of Punjab, in order to distribute funds to locals who have been impacted by the coronavirus outbreak and resulting economic slowdown due to the nationwide lockdown.

What makes mobile wallets like EasyPaisa and Jazz Cash more successful and prevalent in our market is the ease of use. Opening a mobile wallet is simple, as is topping it up through a retailer or a debit card.


Digital payments, whether they are through mobile wallets or debit and credit cards, can help boost the economy significantly. But the lack of a large enough user-base has apparently kept international players such as PayPal and Amazon from entering our market.

It is also pertinent to remember that Pakistan is a country with one of the lowest financial inclusion ratios in the world. Reportedly, only 21 percent Pakistanis have access to traditional banking services. It should come as no surprise that women make-up only seven percent of them.

Still, the potential for growth here is tremendous. According to the World Bank, Pakistan’s digital financial market potential is almost 36 billion dollars. These predictions and findings indeed build a strong case to begin pushing digital payments in the country. If the past few months are any indication, this is no longer as impossible as it once seemed.

The question now is: where do we go from here?

According to a 2009 study, it takes more than two months before a new behaviour to become automatic — 66 days to be exact. Considering we are over six months into the pandemic, and a lot of us have begun to shop online, one wonders if this behaviour will persist or if the habit will break now that lockdowns are eased and shopping malls are seeing crowds again.

It seems that some customers who began shopping for groceries online due to the pandemic are now realising the convenience associated with it. “I had never shopped for groceries online until the lockdown began,” says Ramsha Nadeem, “but these four months have made me see just how smooth the process can be.” Nadeem does not know if she will be going to a grocery store any time soon.

With some reluctance and caveats, GrocerApp’s Ahmed predicts that these newly acquired customers may be even more loyal than the old ones. “Pre-Covid, only one member of the house would do groceries and check the website or app, but now the entire household is turning into customers,” he says. “One day the mother shops from GrocerApp, the next day her children order and the entire family gets to experience online shopping.”

Although all this looks promising, whether this period will leave a lasting impact on how we shop is something only time can tell. Nonetheless, business owners and the e-commerce sector must use this moment to create and maintain a loyal customer base. While the past few months have been trying, they have also shown the power of tech and digital problem-solving. If my 56-year-old mother, who likes traditional ways of doing things and resists change, can also see the merits of e-commerce, I suspect others may also be coming to similar conclusions.

*Name has been changed to protect privacy

The writer is a freelance journalist and a development communications specialist. She is passionate about storytelling, travel, arts, culture, learning and provision of equal opportunities to all