It is tempting, in times of economic stress, to look for quick fixes. During a meeting of the Senate Standing Committee on Finance, Senator Salim Mandviwala revealed that Visa and Mastercard operations in Pakistan require dollar-based settlements, leading to an estimated $250 million in annual payments to these companies, even though all transactions are conducted in Pakistani rupees.

He noted that around 90m Visa and Mastercard cards are currently in circulation in Pakistan, while PayPak cards have still not crossed 5m users, underscoring the overwhelming dominance of international players. His argument is simple: international card schemes route/process transactions abroad and drain Pakistan’s fragile foreign exchange reserves. Yet his proposed solution is one that risks creating bigger problems than the one it seeks to solve.

The proposal to mandate that banks issue customers PayPak cards by default looks less like a safeguard and more like a restriction on consumer choice. Pakistan already has very low credit card penetration, with less than two per cent of the population holding a credit card according to State Bank of Pakistan (SBP) data. This is far below regional peers and highlights the urgent need for greater financial inclusion. Restricting international schemes would only shrink access further, depriving consumers of tools that connect them to global commerce.

To protect the dollar reserves, the SBP relies on targeted safeguards such as capping international card payments at $30,000 per person annually and $90,000 per small and medium enterprise annually. These ceilings prevent excessive spending abroad and ensure that card usage remains aligned with legitimate personal or business needs.

Restricting international schemes would only shrink access, depriving consumers of tools that connect them to global commerce

The SBP also requires international remittance providers to pre-fund foreign exchange into local partner banks before authorising transactions, and prohibits netting of transactions. This means remittance flows actually build Pakistan’s forex buffers rather than deplete them.

International card schemes are not merely conduits for payments. They are technology companies investing billions in research and development. They bring innovations such as AI-driven fraud detection, prepaid corporate cards, tap-to-pay technology, Near Field Communication (NFC)-enabled payments, and remittance solutions.

Parents rely on these services to pay college tuition fees abroad, overseas Pakistanis use them to remit funds back to their families, and international travellers depend on them to spend in Pakistan while travelling in the country. Far from being a threat to forex reserves, these card schemes are part of the infrastructure that enables Pakistan to earn $38 billion in remittances annually.

Moreover, competition between schemes drives down merchant discount rates, making digital payments more affordable. International cards also create transparent transaction trails that support tax collection and revenue mobilisation. Restricting them would not only undermine financial inclusion but also hurt documentation of the economy and resultantly, tax revenues.

The bigger risk is reputational. A regulatory environment hostile to international schemes would deter foreign direct investment. Multinational corporations may view Pakistan as unpredictable and exit the market. At a time when attracting capital is critical, such signals are counterproductive. The witch-hunt against international schemes sends the wrong message to investors and partners who are already wary of Pakistan’s regulatory unpredictability.

That said, concerns about resilience are not entirely misplaced. Russia’s MIR system ensured continuity when Visa and Mastercard had to exit Russia under sanctions in 2022. Pakistan should indeed develop local schemes and processing capacity as a contingency. In the event of sanctions or a cyberattack, having a domestic option would be vital to the economy’s functioning. But the lesson from Russia is not to drive out international schemes. It is to build local capacity alongside them by offering competitive services.

Under the guidance of the SBP to promote financial inclusion and reduce reliance on international card schemes, 1-LINK, a consortium of major banks in Pakistan, has established PayPak as Pakistan’s first and only domestic payment scheme. With support from the Gates Foundation, SBP has also commissioned Raast to provide local rails for processing payments and other transactions.

The right path is balance. Pakistan should strengthen local resilience initiatives while welcoming international initiatives for innovation, competition, and global connectivity. Restrictive policies such as mandatory issuance of local cards or pressuring international companies to go for co-badging for local processing should be avoided. Instead, customers should be free to choose, and banks should be free to offer both.

Building local payments infrastructure is pivotal for Pakistan’s sovereignty, but restricting international card schemes is the wrong tool.

The writer is a public policy professional. He served as Head of Government Affairs – Pakistan and Afghanistan at Visa.

Published in Dawn, The Business and Finance Weekly, April 27th, 2026