Navigating the fintech landscape in Pakistan: legal framework, opportunities and challenges

Thursday 7 March 2024

Sahar Iqbal

Akhund Forbes, Karachi


The financial industry in Pakistan is rapidly evolving, offering a plethora of opportunities while also posing distinct problems. This expansion is fuelled mostly by technical improvements, a young and tech-savvy population and a favourable regulatory framework. However, the legal landscape surrounding fintech in Pakistan is complex, with various regulatory bodies and legal instruments. This article examines the legal framework, prospects and obstacles in Pakistan’s fintech sector, including legislative analysis and examples of emerging technologies.

Legal frameworks and regulatory bodies

The key regulatory agencies for the fintech sector are the State Bank of Pakistan (SBP) and the Securities and Exchange Commission of Pakistan (SECP). The Payment Systems and Electronic Fund Transfers Act 2007[1] is the cornerstone of this regulatory framework, establishing the legal basis for the functioning of electronic payment systems and protecting users’ rights. The SBP’s Regulations for Electronic Money Institutions (EMIs)[2] is a significant step towards creating a favourable environment for digital financial services. The framework describes the licensing and regulatory criteria for EMIs, with the goal of ensuring consumer protection, financial stability and compliance with anti-money laundering and counter-terrorism financing standards. Furthermore, the SBP’s Regulatory Sandbox framework[3] is a key initiative that enables fintech companies and financial institutions to test new products and services in a regulated setting. Not only does it promote innovation, but it also allows the regulators to analyse the impact of new technology on the financial system and consumer protection prior to formalising rules.


The fintech sector in Pakistan has experienced significant expansion and innovation, with both startups and traditional financial institutions bringing new technology to satisfy the different demands of the country’s population. Digital wallets, peer-to-peer lending platforms and blockchain based services are just a few of the innovations transforming Pakistan’s financial scene. These innovations hold the possibility of increasing financial inclusion, particularly in a country where a large proportion of the population lacks access to traditional banking services.

One significant example of Pakistani fintech innovation is the popularity of mobile money services such as JazzCash and EasyPaisa. These platforms have transformed the way people pay, send remittances and access financial services, especially in underserved rural areas. Similarly, the advent of digital banking systems, such as Bank Alfalah’s Alfa, has increased the accessibility and convenience of banking for consumers throughout the country.

Furthermore, blockchain technology, while still in its early stages in Pakistan, represents another huge opportunity. It has the potential to increase openness, security and efficiency in financial transactions. Startups can look into blockchain technology for a variety of applications, including remittances, supply chain finance and identity verification.


Despite these prospects, Pakistan’s fintech businesses confront significant hurdles, particularly on a legal and regulatory level. One of the most significant issues is striking a balance between innovation and regulation. Stringent rules could inhibit innovation and impede the expansion of the fintech sector, whereas too permissive policies could pose concerns to consumer protection, data privacy and financial stability.

Data protection and privacy are particularly important in the fintech sector. With the growing digitisation of financial services, the risk of data breaches and financial fraud has increased. Pakistan currently lacks data protection legislation, evident from the fact that the Personal Data Protection Bill[4] is yet to be formalised as law, raising concerns about the safety of personal and financial information in the digital era. This loophole presents a substantial barrier to customers’ faith in digital financial services.

Another challenge is the digital divide. While fintech has the potential to improve financial inclusion, the digital divide between urban and rural locations, as well as between socioeconomic levels, may limit the availability of these services. Ensuring that fintech benefits are widely available necessitates not only technological solutions but also legal and regulatory frameworks that promote accessibility and affordability.

In conclusion, Pakistan’s fintech business is at a critical juncture, with great prospects for expansion and innovation. The innovations in this sector have the potential to change the country’s financial environment by making financial services more accessible, efficient and inclusive. However, managing legal and regulatory barriers is critical for the long-term growth of fintech in Pakistan. A balanced regulatory approach, together with actions to address data privacy and the digital divide, will be critical in realising the full potential of fintech in Pakistan. Keeping the regulatory framework up to date with technological innovations while safeguarding consumers and ensuring financial stability will play an important role in moulding the country’s fintech future.


[1] Payment Systems and Electronic Fund Transfers Act 2007 at https://www.sbp.org.pk/psd/2007/EFT_Act_2007.pdf accessed 5 March 2024.

[2] Regulations for Electronic Money Institutions (EMIs) at https://www.sbp.org.pk/psd/2019/C1-Annex-A.pdf accessed 5 March 2024.

[4] Draft of the Personal Data Protection Bill at https://moitt.gov.pk/SiteImage/Misc/files/Final%20Draft%20Personal%20Data%20Protection%20Bill%20May%202023.pdf accessed 5 March 2024.