Unlocking financial inclusion with digital ID and payments in Pakistan

Globally, around 850 million people lack legal identity, restraining their capacity to receive basic services and fully participate in the economy—almost twice the population of Europe; this is a harsh reality. Women are extremely affected in low-income countries, particularly in South Asia and Sub-Saharan Africa, with 44 percent without ID compared to 28 percent for men. Many people have an inconsequential digital literacy rate and limited internet connectivity. There is hope that enabling women to access robust digital identities in these locations can support bridging this identity gap. Digital ID access ownership is the starting point for gaining true financial inclusion, digital payment methods, and remittances in countries where such transfers account for up to 20 percent of GDP. Strengthening inclusive digital ID systems is important to increasing financial inclusion and adopting sustainable economic development.

According to the World Bank’s ID4D Global Dataset 2021, almost 200 million people in South Asia lack legal identity, accounting for nearly 25 percent of the global population. Women and rural residents face many disparities, with education, income, and documentation obstacles playing significant roles. Many people do not have birth documents, and application fees and significant travel distances further limit participation. This exclusion restricts access to financial services, healthcare, mobile connectivity, digital rights, and voting, featuring the urgent need for affordable, inclusive, and trustworthy identity solutions across the region.

Digital payments and IDs key to financial inclusion

Insights from development Asia reports that over a billion people in developing Asia are unbanked, and only 21 percent of adults in Pakistan have bank accounts and mobile payment accounts. Financial exclusion hits women worse than men, who are only half as likely as men to have access to banking services. This disparity is being bridged by digital financial services. Mobile money offers huge potential to improve lives by enabling low-cost, fast, safe, and easy transactions. It addresses access barriers by eliminating the need to go to 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 quick payment system that launched in 2021, provides secure, low-cost person-to-person and business-to-business transactions. By 2023, it had handled over 102 million digital payments, making formal financial services available to millions.

Despite improvements, challenges remain to overcome, including a lack of trust, inadequate data protection, financial concerns, and digital literacy gaps, particularly among rural women. The Asian Development Bank-backed Women Inclusive Finance Sector Development Program (WIFSDP) trains female banking agents to reach out to deprived populations.

Lessons from regional giants like India’s UPI and the People’s Republic of China’s (PRC) Alipay highlight the transformative potential of digital payment systems in Pakistan. Government attempts to digitize pensions, taxes, and welfare using secure digital IDs can help to expedite adoption, enhance financial inclusion, and generate 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 upgrades boost ID access choice and services

TechJuice reports that the National Database and Registration Authority (NADRA) has launched new digital ID services to increase accessibility and transparency. The implementation comprises new B-Forms requiring biometric data for children over the age of three, as well as the issuance of separate certificates, which are now required for passport applications.

A crucial feature permits women to list their father’s name instead of their husband’s on CNICs, allowing for more personal choice. Briefing the media, the NADRA spokesperson highlighted that these services are now available at the newly opened 24/7 National Registration Centers in Malir Cantt, Malir, and Surjani Town in Karachi.
In addition, ID services have been transferred from post offices to 1,200 union councils across the country, including 100 in Sindh. Citizens can also access them through the Pak-ID mobile app, which provides standard-fee remote processing—particularly beneficial for overseas Pakistanis.

SBP streamlines digital banking and boosts inclusion

Dawn News reported that 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 in place 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.

Article Topics

digital ID  |  digital identity  |  digital inclusion  |  digital payments  |  financial inclusion  |  gender inclusivity  |  legal identity  |  Pakistan