Boosting Financial Inclusion in Pakistan via Digital ID and Payments

Published Date : 7/31/2025 

Explore how digital ID and payment systems are revolutionizing financial inclusion in Pakistan, particularly for women and rural residents, by overcoming barriers and promoting economic growth. 

Globally, around 850 million people lack legal identity, which severely limits their access to basic services and economic participation. This issue is particularly acute in low-income countries, especially in South Asia and Sub-Saharan Africa, where 44 percent of women lack ID compared to 28 percent of men. Many of these regions also suffer from low digital literacy and limited internet connectivity. However, there is hope that digital ID systems can help bridge this identity gap, enabling women to access robust digital identities and financial services in countries where remittances can account for up to 20 percent of GDP. Strengthening inclusive digital ID systems is crucial for increasing financial inclusion and fostering sustainable economic development.

According to the World Bank’s ID4D Global Dataset 2021, nearly 200 million people in South Asia lack legal identity, representing about 25 percent of the global population. Women and rural residents face significant disparities due to educational, income, and documentation obstacles. Many lack birth documents, and high application fees and long travel distances further hinder their access to essential services. This exclusion affects their ability to use financial services, healthcare, mobile connectivity, digital rights, and voting, underscoring the urgent need for affordable, inclusive, and trustworthy identity solutions in the region.

Digital payments and IDs are key to achieving financial inclusion. According to Development Asia, over a billion people in developing Asia are unbanked, and only 21 percent of adults in Pakistan have bank accounts or mobile payment accounts. Financial exclusion disproportionately affects women, who are only half as likely as men to have access to banking services. Digital financial services, particularly mobile money, offer significant potential to improve lives by enabling low-cost, fast, safe, and easy transactions. Mobile money addresses access barriers by eliminating the need to visit physical bank branches. In 2022, Pakistan had only 10.8 commercial bank branches per 100,000 adults, one of the lowest ratios in the region.

RAAST, Pakistan’s real-time payment system launched in 2021, provides secure, low-cost person-to-person and business-to-business transactions. By 2023, it had processed over 102 million digital payments, making formal financial services available to millions. Despite these improvements, challenges remain, including a lack of trust, inadequate data protection, financial concerns, and digital literacy gaps, especially among rural women. The Asian Development Bank-backed Women Inclusive Finance Sector Development Program (WIFSDP) trains female banking agents to reach underserved populations.

Lessons from regional giants like India’s UPI and China’s Alipay highlight the transformative potential of digital payment systems in Pakistan. Government initiatives to digitize pensions, taxes, and welfare using secure digital IDs can help expedite adoption, enhance financial inclusion, and promote equitable economic growth. Moreover, the government can lead by example, using digital methods for tax payments, pensions, and other services. A digital ID system can also facilitate account access. More policies that promote trust in the digital economy, such as those on data privacy, cybersecurity, and consumer protection, must be prioritized.

NADRA (National Database and Registration Authority) has launched new digital ID services to increase accessibility and transparency. These services include new B-Forms requiring biometric data for children over the age of three, as well as separate certificates required for passport applications. A crucial feature allows women to list their father’s name instead of their husband’s on CNICs, providing more personal choice. NADRA has also opened 24/7 National Registration Centers in Malir Cantt, Malir, and Surjani Town in Karachi. ID services have been transferred from post offices to 1,200 union councils across the country, including 100 in Sindh. Citizens can access these services through the Pak-ID mobile app, which offers standard-fee remote processing, particularly beneficial for overseas Pakistanis.

The State Bank of Pakistan (SBP) has simplified banking procedures to increase financial inclusion and digital access. Banks are now required to open new personal or business accounts within two days, with application tracking to ensure transparency. In recent years, the SBP has introduced several initiatives to broaden access to financial services, including branchless banking, Asaan accounts, digital onboarding, and specialized accounts for freelancers, overseas Pakistanis, and remittance recipients. The SBP’s new framework simplifies documentation, allows for digital account opening, and requires regulated businesses to provide merchants with at least one digital payment option, such as Raast QR codes, POS terminals, or online checkout. These efforts aim to accelerate Pakistan’s transition to digital banking, increase convenience, and promote broader economic involvement, particularly among small businesses and marginalized communities. 

Frequently Asked Questions (FAQS): 

Q: What is the global impact of lacking legal identity?

A: Globally, around 850 million people lack legal identity, which severely limits their access to basic services and economic participation. This issue is particularly acute in low-income countries, especially in South Asia and Sub-Saharan Africa.

Q: How does digital ID help in financial inclusion?

A: Digital ID systems help bridge the identity gap, enabling women and rural residents to access robust digital identities and financial services. This is crucial for increasing financial inclusion and fostering sustainable economic development.

Q: What is RAAST, and how has it impacted Pakistan?

A: RAAST is Pakistan’s real-time payment system launched in 2021, which provides secure, low-cost person-to-person and business-to-business transactions. By 2023, it had processed over 102 million digital payments, making formal financial services available to millions.

Q: What new services has NADRA introduced to increase ID accessibility?

A: NADRA has launched new digital ID services, including new B-Forms requiring biometric data for children over the age of three, separate certificates for passport applications, and a feature allowing women to list their father’s name instead of their husband’s on CNICs.

Q: How is the State Bank of Pakistan (SBP) simplifying banking procedures?

A: The SBP has simplified banking procedures to increase financial inclusion and digital access. Banks are now required to open new personal or business accounts within two days, with application tracking to ensure transparency. The SBP has also introduced several initiatives, including branchless banking, Asaan accounts, and digital onboarding. 

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