Unlocking Digital Financial Services in Pakistan

For years, mobile money platforms like Easypaisa and JazzCash have been synonymous with one primary function in rural Pakistan: remittances. In the fiscal year 2022-23, the total value of mobile banking transactions in Pakistan soared to PKR 9.1 trillion, a substantial portion of which constituted domestic remittances funneled from urban to rural areas (State Bank of Pakistan [SBP], 2023). However, a quiet revolution is underway. These platforms are rapidly evolving from simple cash-transfer mechanisms into sophisticated financial ecosystems that are fundamentally reshaping the operations of rural agri-businesses.

This initial use case was crucial for building a foundation of trust and familiarity with digital transactions among a population where, despite high mobile penetration, only 21% of adults had a formal bank account as of 2021 (World Bank, 2021). Now, that foundation is being built upon in innovative ways. This article moves beyond the remittance narrative to analyse the emerging usage patterns that are integrating digital finance into the very fabric of agricultural commerce.

The shift is being driven by necessity and opportunity. The traditional agricultural economy, reliant on cash and informal credit, is fraught with inefficiencies. A study by Karandaaz Pakistan estimated that 65% of smallholder farmers rely exclusively on cash for all transactions, making them vulnerable to theft and loss (Karandaaz, 2022). Easypaisa and JazzCash, with their extensive networks of over 180,000 branchless banking agents nationwide (Pakistan Telecommunication Authority [PTA], 2024), offer a practical solution. They are not just apps; they are a new piece of infrastructure, as critical for modern agri-business as a paved road or a reliable water source.

This transformation is further accelerated by government initiatives such as the State Bank of Pakistan’s (SBP) National Payment Systems Strategy (NPSS), which aims to digitize payments and promote financial inclusion. Programs like Raast, the instant payment system, are integrating with mobile wallets to enable seamless, low-cost transactions. For rural agri-businesses, this means faster settlement cycles and reduced dependency on cash, unlocking new possibilities for growth and efficiency. As more farmers and businesses adopt these tools, the entire agricultural value chain stands to benefit from increased transparency, security, and financial resilience.

Moreover, the post-pandemic landscape has acted as a catalyst, accelerating the acceptance of digital payments even among previously hesitant segments of the population. The need for contactless transactions during the COVID-19 pandemic demonstrated the practical utility of mobile money beyond remittances, leading to a permanent behavioral shift among many rural consumers and businesses. This has created fertile ground for the expansion of more complex financial services, setting the stage for a comprehensive digital transformation of the agrarian economy.

From Cash-to-Cash to Business-to-Business: The Shift in Transaction Types

The most significant shift is the move from Person-to-Person (P2P) transfers to Business-to-Business (B2B) and Business-to-Customer (B2C) transactions. While P2P still dominates volume, the merchant payment segment is the fastest growing. In its annual report, JazzCash highlighted that its merchant payment transactions grew by over 120% in 2023, indicating rapid adoption by businesses for formal and informal commerce (JazzCash, 2023).

Smallholder farmers are increasingly using these platforms to pay for seeds, fertilizers, and pesticides. For example, a leading fertilizer company, Fauji Fertilizer Company (FFC), reported that over 15% of its retail sales from small farmers in Punjab and Sindh are now settled digitally through partner platforms, reducing cash handling costs and ensuring immediate settlement. This digital record also helps farmers build a transaction history. A pilot by the State Bank of Pakistan found that farmers with a consistent digital transaction history were 40% more likely to be approved for a digital micro-loan than those without, as it provides a verifiable credit profile (SBP, 2022).

The ability to pay utility bills digitally saves invaluable time and resources. Pakistan has over 1.2 million agricultural tube wells. A farmer in Bahawalpur typically spent 3-4 hours and PKR 500-1000 in travel costs to pay a single electricity bill in town. Now, over 35% of DISCO (Distribution Company) bill payments in rural areas are made digitally, a figure that has grown exponentially from just 5% in 2019 (SBP Payment Systems Review, 2023). This efficiency directly translates into more time dedicated to productive farm activities.

The adoption of B2B and B2C transactions is also fostering financial discipline among small agri-businesses. Digital records of transactions help businesses track cash flows, manage expenses, and even prepare basic financial statements, which were previously challenging in a cash-dominated environment. This digital footprint is not only useful for day-to-day management but also strengthens their credibility when engaging with suppliers, buyers, and financial institutions. As more businesses recognize these benefits, the shift toward digital transactions is expected to accelerate, creating a more organized and efficient rural economy.

Moreover, the integration of mobile money with inventory management systems is helping input suppliers optimize their operations. For instance, dealers can now track sales trends in real-time, manage stock levels more effectively, and offer targeted discounts to farmers who pay digitally. This synergy between financial and operational tools is enhancing the overall productivity of the agricultural sector, making it more responsive to market demands and reducing wastage. It creates a virtuous cycle where digital payments provide data that improves supply chain efficiency, which in turn incentivizes further digital adoption.

The Emergence of Integrated Digital Value Chains

The individual usage patterns are coalescing into nascent digital agricultural value chains. A successful example is the partnership between JazzCash, Nestlé Pakistan, and their milk collection centers. Over 25,000 dairy farmers supplying milk to Nestlé now receive instant digital payments directly into their JazzCash wallets. This initiative has increased farmer income by 10-15% by reducing delays and middleman commissions. The farmers then use these digital funds to pay for feed, veterinary services, and utilities, creating a closed-loop digital ecosystem.

This creates a digital footprint for the farmer’s business activities. The Raast instant payment system, Pakistan's first-of-its-kind digital payment infrastructure, is further enabling this by facilitating low-cost, bulk B2B transactions. This digitization is formalizing the rural economy; the Federal Board of Revenue (FBR) has noted a 12% increase in the tax base from small rural businesses in regions with high mobile money adoption, as digital transactions create an auditable trail (FBR, 2023).

The digital value chain also empowers farmers by providing them with better access to market information. Mobile platforms can deliver real-time price updates, weather forecasts, and expert advice, enabling farmers to make informed decisions about when to sell their produce or how to manage their crops. This access to information reduces their dependency on intermediaries and enhances their bargaining power. For instance, farmers in the Punjab region using JazzCash’s market linkage features reported a 20% improvement in their ability to negotiate prices with wholesalers, leading to higher profitability.

Furthermore, digital value chains are fostering innovation in agricultural financing. With a clear record of transactions and sales, financial institutions can develop tailored products such as crop loans, insurance, and investment plans. For example, JS Bank partnered with Easypaisa to launch "Harvest Plus," a digital loan product for farmers based on their transaction history. This product disburses loans within minutes, allowing farmers to access funds precisely when needed for inputs or expansion. Such innovations are bridging the gap between traditional banking services and the unbanked agricultural community, driving sustainable growth by leveraging the data generated within the digital ecosystem itself.

Overcoming Barriers: Literacy, Connectivity, and Trust

Despite the promising trends, significant barriers remain. Adoption is not uniform. A 2023 GSMA Consumer Survey found that while 82% of Pakistani adults are aware of mobile money, only 34% actively use it. The primary barrier for non-users (45%) was a lack of knowledge and skills. The fear of making an error is a major deterrent, especially among women and older farmers (GSMA, 2023).

While mobile broadband penetration stands at 55%, the quality of service in remote rural areas remains a challenge. The Pakistan Telecommunication Authority's (PTA) performance data shows that 4G availability in rural districts can be as low as 60% compared to over 90% in urban centers, leading to transaction failures and frustration (PTA, 2024).

A deep-seated preference for tangible cash persists. A Karandaaz Pakistan study revealed that 38% of non-users distrusted the security of mobile money platforms. Concerns about fraud, agent misconduct, and the inability to resolve disputes easily are significant hurdles that require robust customer protection frameworks (Karandaaz, 2022).

To address the digital literacy gap, organizations like the National Rural Support Program (NRSP) are collaborating with mobile network operators to conduct training workshops in villages. These workshops focus on basic mobile wallet operations, security practices, and the benefits of digital transactions. In a pilot project across 50 villages, NRSP reported a 30% increase in digital adoption among trained farmers within six months. Additionally, the use of voice-based tutorials in local languages and interactive USSD menus has made these platforms more accessible to illiterate or semi-literate users, further driving inclusion.

Building trust requires not only education but also demonstrable security and reliability. Mobile money providers are investing in advanced security features such as biometric verification, two-factor authentication, and automated fraud detection systems. Moreover, the establishment of dedicated customer support centers in rural areas, along with a streamlined process for resolving disputes, is helping to alleviate concerns. For example, Easypaisa’s "Agent Ghar" initiative ensures that agents are trained to assist users with transactions and troubleshoot issues, thereby fostering a sense of security and reliability among rural customers. These efforts must be continuous and scaled up to build the long-term confidence necessary for widespread adoption.

The Road Ahead: Opportunities for Deeper Integration and Sustainability

The current usage patterns point to several exciting opportunities for deeper integration, backed by pilot data. Punjab's LIS (Land Record Information System) has digitized over 90% of its land records. Linking this database with mobile wallets, as piloted in three districts, could facilitate secure, digital leasing payments, bringing a massive informal sector into the digital fold and providing landlords and tenants with a secure, transparent financial mechanism.

Using the digital transaction history from the Nestlé partnership, JazzCash and a microfinance institution launched a pilot credit product for dairy farmers. Based on their digital receipt history, over 5,000 farmers were pre-approved for loans ranging from PKR 15,000 to PKR 75,000 without requiring physical collateral, with a disbursement rate of over 98%. This model can be scaled to other commodities, using satellite data and AI for automated index-based insurance payouts in case of drought or flood.

The Pakistan Mercantile Exchange (PMEX), in collaboration with a telecom provider, is developing a platform for smallholder farmers to sell future contracts of commodities like wheat and cotton. The settlement will be directly into their mobile wallets, ensuring price transparency and immediate payment, potentially increasing farmer profits by 20-30% by cutting out middlemen.

The integration of Internet of Things (IoT) technology with mobile money platforms presents another transformative opportunity. For instance, smart sensors can be used to monitor soil health, crop growth, and irrigation levels, and the data can be linked to digital platforms to automate payments for inputs or trigger insurance payouts in case of adverse weather conditions. Such innovations can make farming more precise and efficient, reducing resource wastage and maximizing yields. Pilot projects in the Thal Desert region are testing IoT-enabled drip irrigation systems that integrate with JazzCash for automated payments, resulting in 30% water savings and 15% higher crop yields.

Furthermore, mobile money platforms can play a pivotal role in promoting sustainable agricultural practices. By offering digital incentives such as cashback or lower interest rates on loans for farmers who adopt eco-friendly techniques like organic farming or water conservation, these platforms can drive positive environmental outcomes. For example, a proposed collaboration between Easypaisa and the Ministry of Climate Change aims to reward farmers who use certified organic seeds and fertilizers with digital credits, which can be redeemed for future purchases. This not only encourages sustainability but also strengthens the digital ecosystem by increasing transaction volumes and user engagement, aligning economic incentives with environmental stewardship.

Conclusion

The narrative of Easypaisa and JazzCash in rural Pakistan is being rewritten. While remittances remain crucial, their role is expanding dramatically. These platforms are becoming the operational backbone for rural agri-businesses, enabling everything from input procurement to sales and wages. The emergence of data-driven digital value chains promises a future where the entire agricultural economy is more transparent, efficient, and resilient. The challenge now lies in a concerted effort to improve digital literacy through targeted programs and to enhance rural connectivity infrastructure. The journey beyond remittances is well underway, cultivating a more prosperous future for Pakistan's farmers by transforming them into active, empowered participants in a modern digital marketplace.

The continued collaboration between the government, private sector, and civil society will be essential to overcome existing barriers and unlock the full potential of digital financial services. As technology evolves and adoption grows, platforms like Easypaisa and JazzCash will not only facilitate transactions but also serve as gateways to a wide range of services, including healthcare, education, and e-governance. This holistic approach to digital inclusion can uplift rural communities, reduce poverty, and drive sustainable economic development across Pakistan, ensuring that the digital revolution leaves no one behind.

References: FBR; GSMA; JazzCash; Karandaaz Pakistan; PTA; SBP; World Bank.

Please note that the views expressed in this article are of the author and do not necessarily reflect the views or policies of any organization.

The writer is affiliated with the School of Economics, Sichuan Agricultural University, Chengdu, PR China and can be reached at talpuradil351@yahoo.com

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