Pakistan’s federal government has greenlit an annual Rs3.5 billion subsidy to speed up the rollout of Raast QR-based digital payments at retail stores, aiming to reduce reliance on cash and bring more merchants into the formal financial system.
The initiative, approved by the Economic Coordination Committee (ECC), is part of Islamabad’s wider push toward a cashless economy. Retailers across the country are now required to display Raast QR codes at their outlets by August 31, giving customers a low-cost, instant payment option.
How the Subsidy Works
Under the newly approved Merchant Discount Rate (MDR) Subsidy Scheme, commercial banks, microfinance banks, and other electronic money institutions regulated by the State Bank of Pakistan (SBP) will receive 0.5% of each Raast QR transaction or Rs100 per payment, whichever is lower.
Financial institutions can also charge merchants up to 0.25% of transaction value for onboarding and servicing costs. The subsidy will be financed via a Technical Supplementary Grant this fiscal year and is expected to support transactions worth Rs700 billion annually.
Policy Backing and Future Plans
The program stems from directives issued by Prime Minister Shehbaz Sharif in July 2025 during a high-level steering committee meeting on digital payments. Alongside this subsidy, the government is also exploring reductions in import duties and taxes on payment acceptance devices to lower entry barriers for merchants.
The SBP, which designed the scheme in consultation with industry stakeholders, will track adoption rates, consumer uptake, and transaction growth over the next year. A comprehensive progress report is due in July 2026, which will guide decisions on extending or revising the program.
Why It Matters
Pakistan has been slow to transition away from cash, with digital payments still underutilized at the retail level. By effectively subsidizing transaction fees, the government hopes to create a cost-neutral environment for small businesses to accept digital payments, improving transparency, tax compliance, and financial inclusion.
If successful, this move could significantly expand Raast’s footprint — a critical step for building a modern, scalable payments ecosystem.
