Cashless economy

The good old exchange of money, usually in the form of greasy and worn banknotes, carrying the sweaty marks of the pockets they had inhabited, or the horny hands they had passed, is growing to be a thing of the past. At least in the retail trade, cashless payments are growing, with 9.1 billion transactions worth Rs 612 trillion, up 38 percent in volume and 12 percent in value year-on-year. This was disclosed by the State Bank of Pakistan in its Annual Report on Payment Systems for 2024-25. Once again, it seems that convenience is the driving force, because the retail sector would continue to stick to the anonymity of cash. The trouble it has with digital payments is that it enables a record to be kept. While the SBP is able to compute the number of transactions, and their value, it cannot do so for the cash transactions that take place, and which still dwarf the digital payments. However, much as the retailer would like to avoid digital payments, the customers demand this convenience, and shopkeepers have to offer it. Banks also have a vested interest in the spread of digitization, because it is through them that it operates.

However, there are still some question marks. Large transactions are still not digital. One reason is the low limit for card transactions, but another is good old-fashioned prejudice. When investing in real estate, even though with inflation and the depreciation of money, the amounts are swelling, but cash payments still occur. Even cashiers’ cheques are not deemed trustworthy enough, and thus a humungous amount has to be drawn in cash from one branch, laboriously counted, paid out, and then counted all over again by another bank’s staff, before being deposited.

The government has undertaken a number of measures to meet the public demand for digitization, and the most important is to switch over to making and accepting digital payments. Apart from such taxation measures as exempting the necessary machinery from taxes. Important among them is the reduction of Right of Way fees (charged wherever the necessary firbreoptic cable passes) to nothing. However, the government seems suddenly concerned whether it is doing things right, which is why it is calling in an international consultancy firm to hold an audit and review to examine whether the process is being conducted right. It is essential to remember that the most important characteristic of cash must be carried over: reliability, trustworthiness.