Pakistan (PK)

Licensing, Authorisation & Market Access

Pakistan's non-bank e-money issuance is licensed under the 2019 EMI Regulations, revised 21 June 2023, through a three-stage process, In-Principle Approval, Pilot, and Commercial Operations, under Section 24 of the Payment Systems and Electronic Fund Transfers Act 2007. The State Bank of Pakistan (SBP) administers this regime directly, and it sits alongside a parallel Digital Bank framework launched in January 2022. Under that framework, SBP issued No Objection Certificates to five successful digital-bank applicants, selected from 20 applications received by 31 March 2022, in January 2023, the first stage of a multi-stage process running from NOC to incorporation, in-principle approval, pilot, and finally commercial licence. The current commercial-licensing status of these five entities as of this cycle is not confirmed in available research, and NOC issuance should not be read as equivalent to a full commercial licence.

The EMI cohort itself shows material churn. As of December 2025, six EMIs remain live, SadaPay, NayaPay, Keenu, Finja (acquired by OPay), OneZapp/EP Systems, and Digitt+/Akhtar Fuiou, four have exited the market, Careem, Checkout.com, TAG, and CMPECC, and six more sit at in-principle-approval or pilot stage. Only SadaPay and NayaPay have reached commercial scale after eight years of the licensing regime's existence, an attrition pattern that reflects thin merchant-discount economics and sustained competition from telco-backed mobile wallets such as JazzCash and Easypaisa.

Outlook

The near-term watch items for this module are whether any of the five digital-bank NOC holders convert to full commercial licences, and whether further EMI-cohort attrition or consolidation follows the pattern already seen in TAG's, Careem's and Checkout.com's exits. Verification of the digital-bank pipeline against SBP's register should be treated as a priority gap before the current standing position is relied upon.

Conduct, Safeguarding & Financial Promotions

Customer funds collected against e-money issuance in Pakistan must be placed into a segregated Trust Account with a licensed bank, held distinct from the EMI's own funds, under the EMI Regulations administered by the State Bank of Pakistan. This mechanism is the core customer-fund-protection architecture for the non-bank e-money sector and applies uniformly across the EMI cohort regardless of individual institutions' commercial scale.

Conduct obligations extend into fraud redress. Banks and microfinance banks must compensate customers within two business days for verified financial loss due to cyber crime or online banking fraud, a rule paired with a mandated EMVCo 3-D Secure implementation for card payments. Together, the Trust Account safeguard and the two-day reimbursement mandate form the standing conduct baseline for Pakistan's payments sector, though financial-promotion enforcement actions specific to payments and e-money conduct, as distinct from AML/KYC enforcement, remain under-indexed in available research this cycle.

Outlook

The safeguarding and conduct baseline appears settled and unlikely to shift materially in the near term, but the under-indexing of financial-promotion enforcement is a bias-correction flag worth tracking should SBP publish more granular conduct-specific enforcement data in future disclosures.

Stablecoins & Digital Money

The Virtual Assets Act 2026, passed by Parliament in March 2026, confers permanent statutory status on the Pakistan Virtual Assets Regulatory Authority, succeeding the July 2025 Virtual Assets Ordinance that had been promulgated by presidential decree under Article 89; Section 74 of the new Act deems prior NOCs and licences valid under the successor regime. This is the clearest reversal yet of the 2018-2025 crypto-ban era, moving Pakistan from an ordinance-based interim posture to a permanent statutory footing for virtual-asset regulation.

The banking interface has been opened in parallel. SBP Circular No. 10 of 2026, issued in April 2026, permits regulated banks to open accounts for PVARA-licensed virtual asset service providers subject to segregated Client Money Accounts, while continuing to bar banks from investing in, trading, or holding virtual assets with either their own or customer funds. On the product side, the Act prohibits algorithmic stablecoins outright, while permitting fiat- or asset-backed stablecoin-like tokens under licensing and reserve requirements; the implementing reserve and redemption rulebook has not yet been published, leaving a material gap in how the regime will function in practice.

Outlook

Watch for publication of PVARA's reserve and redemption rulebook, which will determine whether fiat-backed stablecoin issuance can proceed on a fully specified basis, and for any indication of how the Ministry of Finance's exploratory tokenisation discussions with Binance translate into concrete transactions.

Operational Resilience & Critical Infrastructure

SBP's 2017 IT security and risk-management framework requires banks to establish Security Operations Centers, conduct regular audits, and report major cyber incidents to SBP, forming the foundational resilience baseline for Pakistan's banking sector. That baseline has been extended by the 2026 Cyber Shield strategy, which moves resilience posture beyond basic prevention toward institutional resilience and recovery capability, an explicit response to the fact that legacy systems remain in use across many banks.

Outlook

The near-term question is implementation pace: whether Cyber Shield's recovery-capability objectives translate into measurable reductions in incident-response times, given the legacy-systems constraint the strategy itself acknowledges.

Scheme & Network Compliance

1LINK, Pakistan's first fully licensed PSO/PSP since 2015, operates PayPak, the domestic card scheme launched in 2016, is PCI DSS certified, and connects member banks to Visa, Mastercard, UnionPay and JCB. This positions 1LINK as the central switch through which nearly all card-scheme compliance obligations flow for Pakistani issuers and acquirers. In December 2025, 1LINK secured Mastercard Card Personalization Bureau certification, supporting PayPak, Mastercard, UnionPay International, and co-badged card issuance for over ten banks, the most recent scheme-compliance development in the market.

Outlook

1LINK's certification trajectory suggests continued consolidation of card-personalisation and bureau services under a single domestic switch; watch for whether additional international schemes seek similar co-badging arrangements through 1LINK.

Payment Corridor Dynamics

The Roshan Digital Account, launched in September 2020, channels non-resident Pakistani inflows via correspondent banking arrangements, with deposits reaching over $5.2 billion by end-October 2022, making it the anchor mechanism for Pakistan's inbound remittance corridor. NayaPay partnered with Alipay+ in December 2025 to enable global QR-based payment acceptance, extending a domestic EMI's cross-border reach beyond its earlier Ant Group consumer-zone partnership announced in April 2024, signalling an emerging second wave of corridor development beyond the traditional correspondent-bank channel.

Outlook

Watch for whether NayaPay's Alipay+ interoperability is replicated by other EMIs or extended into Raast itself, which would mark a structural shift in how Pakistan's remittance corridors are built, away from correspondent-bank-only channels and toward QR-based interoperability.

Industry Structure & Commercial Dynamics

JazzCash, operated by Mobilink Microfinance Bank, and Easypaisa, operated by Telenor Microfinance Bank, each have over 15 million active users, dominating Pakistan's wallet landscape ahead of a fragmented cohort of roughly six EMIs. That dominance sits against a contracting venture market: 2025 equity funding through November totalled only $5 million across three rounds, a 31.51% year-on-year drop from 2024, even as strategic investment continued, illustrated by VEON's $20 million injection into Mobilink Bank in January 2026 to support its Islamic banking expansion.

Outlook

The divergence between contracting venture funding and continued strategic bank-telco investment suggests consolidation around incumbent, balance-sheet-backed players rather than new entrant formation; watch for whether any of the six-EMI cohort's remaining pilot-stage entrants secure comparable strategic backing.

Legal & Litigation

SBP imposed Rs465.08 million in penalties on 10 banks for the quarter ended 31 December 2023, including UBL at Rs114.19 million, Standard Chartered Pakistan at Rs58.38 million, and Mobilink Microfinance Bank at Rs14.64 million, for CDD/KYC, foreign-exchange, AML/CFT and branchless-banking violations; this remains the most recent quarterly enforcement disclosure surfaced this cycle. Separately, TAG's EMI licence was revoked by SBP after its attempted acquisition of Samba Bank collapsed, while Paymax requested closure in October 2023 and Careem withdrew its licence the same year.

Outlook

No more recent quarterly enforcement disclosure than the December 2023 data point has surfaced; watch for SBP's next published penalty round as a signal of whether enforcement intensity is increasing or steady.

Merchant Acquiring & Risk

A Rs3.5 billion subsidy programme, running from September 2025 through June 2026 as part of a three-year plan, has reimbursed merchants at 0.5% of P2M QR transaction value or Rs100, whichever is lower, in an economy where over 85% of transactions remain cash-based. That programme window has now lapsed as of this cycle's July 2026 retrieval date, with no confirmed follow-on phase.

Outlook

Whether the subsidy is renewed or converted into a permanent scheme will be a key determinant of merchant-acquiring penetration given the depth of the underlying cash-based economy; a published high-risk-MCC acquiring treatment schedule for Pakistani acquirers also remains unlocated.

Product Innovation & Market Development

Raast, launched in January 2021 with P2P capability added in February 2022 and P2M/QR in March 2022, is the central pillar of Pakistan's digital payments infrastructure; SBP formalised the Raast Participation Criteria in February 2025, covering 44 onboarded entities. In parallel, SBP is piloting a Central Bank Digital Currency alongside the new virtual-asset regulatory framework, though pilot scope and timeline detail remain sparse in available disclosure.

Outlook

The next disclosure to watch for is scope and timeline detail on the CBDC pilot, alongside any expansion of Raast's Participation Criteria beyond the current 44 onboarded entities as adoption widens under the National Financial Inclusion Strategy's 2028 target.

Consumer Protection & APP Fraud

Banking Mohtasib Pakistan, an independent statutory ombudsman under the Federal Ombudsmen Institutional Reforms Act 2013, processed over 25,000 complaints and delivered Rs1.26 billion in monetary relief in 2023; escalation to the Mohtasib is available if a bank's Complaint Management Unit fails to resolve a complaint within 45 days, though microfinance-bank customers are excluded and must approach SBP directly. Banks and microfinance banks are separately required to compensate customers within two business days for verified cyber-fraud or online-banking-fraud losses, a direct APP-fraud reimbursement analogue to PSR-style rules seen elsewhere.

Outlook

The tiered CMU-to-Mohtasib redress structure appears stable; the more material open question is whether microfinance-bank customers' direct-to-SBP escalation route delivers comparable outcomes to the statutory ombudsman channel available to full bank customers.

AML/CFT & Financial Crime

This module is sourced from Sentinel.gi, the Financial Intelligence Monitor's illicit-finance feed, and is carried here as payments-context provenance rather than original illicit-finance analysis. Pakistan exited the FATF grey list in October 2022 and has remained off both the blacklist and grey list through the 19 June 2026 FATF list update, spanning six consecutive plenaries. Continuing reports of digital-wallet misuse by proscribed organisations, including Jaish-e-Mohammad, are flagged by Sentinel as touching Pakistan's 2018/2021 FATF commitments despite the grey-list exit; readers seeking the underlying illicit-finance assessment should consult the Sentinel feed directly.

Outlook

Pakistan's off-list status has now held for six consecutive plenaries; the residual digital-wallet-misuse signal is the item most likely to affect that status, and any deterioration would be expected to surface first in the Sentinel feed rather than in WPM's own payments research.

Correspondent Banking, Settlement & Access

PRISM RTGS Rules 2008, issued under the Payment Systems and Electronic Fund Transfers Act 2007, established Pakistan's real-time gross settlement mechanism; 1LINK has served as a special participant for electronic clearing settlement since July 2018. This bank-centred settlement architecture sits against a structural access asymmetry that is the module's analytical spine: non-bank EMIs settle through sponsor banks rather than holding direct RTGS access. Commentary warns that renewed FATF pressure could damage Pakistan's correspondent banking relationships and jeopardise the IMF Extended Fund Facility given its own AML/CFT conditionalities, a structural vulnerability that compounds the existing bank-versus-non-bank access divide.

Outlook

The correspondent-banking de-risking exposure flagged this cycle is the module's central watch item; any deterioration in Pakistan's FATF-adjacent standing would be expected to widen, rather than narrow, the settlement-access gap between bank and non-bank participants.

Commercial Intelligence (M&A, Investment & Product)

VEON invested $20 million in Mobilink Bank in January 2026 to support the microfinance bank's Islamic banking expansion, a strategic telco-into-bank investment continuing the consolidation trend visible in the broader market. Andreessen Horowitz led a $12.9 million funding round for ZAR, a Pakistani startup developing a dollar-backed stablecoin designed for mass adoption through retail agents and kiosks, a landmark stablecoin-focused venture round amid an overall fintech funding contraction. Mashreq launched its full-service digital retail bank, Mashreq Bank Pakistan, in Islamabad in September 2025, marking a foreign-bank digital entrant into Pakistan's licensed digital-bank cohort. The Ministry of Finance signed a memorandum of understanding with Binance in December 2025 to explore tokenisation initiatives covering up to $2 billion in state-owned assets, alongside PVARA issuing preliminary no-objection certificates to Binance and HTX; the value of the collapsed TAG-Samba Bank acquisition attempt was not publicly disclosed, and this MoU likewise is not yet a binding transaction, its status remaining exploratory and preliminary.

Outlook

Virtual-asset market entry, via the Binance/HTX preliminary NOCs and the Ministry of Finance tokenisation MoU, together with the a16z-led ZAR stablecoin raise, dominate the trailing-twelve-month commercial picture; watch for whether the MoF-Binance exploration converts into a binding tokenisation transaction and whether further foreign-bank digital entrants follow Mashreq's lead.