The government has decided to make the federal capital the country's first fully cashless city and set Dec 31 as the deadline for the transition.
The decision was taken at an important meeting on the Cashless Capital project chaired by State Minister for Interior Talal Chaudhry in Islamabad on Friday, according to an official statement by the Ministry of Interior on X.
Chaudhry said consultation and suggestions from all stakeholders were important for the success of the project.
"The implementation of the project is under way at a fast pace on the special instructions of Prime Minister Shehbaz Sharif and Interior Minister Mohsin Naqvi," Chaudhry was quoted as saying.
Naqvi had promised the prime minister that Islamabad would be made Pakistan's first cashless city and the world's first cashless capital, the state minister added.
"After Nov 30, no cash payment will be accepted in any department of the Islamabad Capital Territory administration and the Capital Development Authority (CDA)," Chaudhry stated.
The minister said the government aimed to bring all merchants in the capital onto digital payment systems by Dec 31, from roadside vendors and small shops to large commercial establishments. About 26,000 merchants in Islamabad have already been connected to the digital payments system, he said.
Chaudhry said the cashless system would improve financial transparency, tax monitoring and the transaction system.
The meeting was attended by CDA Chairman Sohail Ashraf, representatives of the banking sector and senior government officials. The bankers welcomed the initiative and assured the authorities of their full cooperation.
The move follows earlier steps. The CDA had announced plans to make QR code-based digital payments mandatory at all businesses and public transaction points. The interior ministry had also announced a fully cashless system across all passport offices, with a 15-day deadline for the transition.
What other countries have done
No country has a clean record to show on going entirely cashless, and the nearest example has already stepped back from the idea. Sweden is widely seen as the most cashless society in the world.
Worldpay data show cash is used for less than 1 percent of e-commerce transactions in Sweden and about 4 percent of in-store transactions. About 8 million Swedes use Swish, an app for instant payments and transfers.
Analysts have listed the benefits of such a shift. The World Economic Forum noted that digital payments are easy to use, can cut costs for businesses and can reduce tax evasion, corruption and organized crime.
The Swedes, however, have discovered the downside. A law requiring banks to offer cash services, and to ensure people do not have to travel far to reach them, has come into effect.
Sweden's Civil Contingencies Agency warned that a totally cashless society would be extremely vulnerable in the event of an attack or a natural disaster.
In November 2024, the defence ministry sent every household a booklet on preparing for crisis or war, which encouraged people to use cash regularly. The Riksbank has also backed proposals that would oblige supermarkets and healthcare centres to accept cash.
The Access to Cash Review, an independent UK report that drew on Sweden's experience, warned that millions could be left out of the economy if societies sleepwalk into going cashless.
India offers a different kind of success. It has not abolished cash, but it has moved a large share of everyday payments onto one digital rail. The Unified Payments Interface (UPI) processed 21.70 billion transactions worth Rs28.33 lakh crore in January 2026 alone, and accounted for 81 percent of all retail digital transactions in India.
The International Monetary Fund (IMF) has recognised UPI as the world's largest retail fast-payment system by volume, with 129.3 billion transactions and a 49 percent global share in 2024.
India's Direct Benefit Transfer system has streamlined the delivery of government benefits straight into bank accounts.
On the paperless side, Estonia is the model most often cited. Ninety-nine percent of its public services, including tax filing and voting, are available digitally. The Estonian government says the lower administrative burden saves about 820 years of working time every year, equal to fiscal savings of around 2 percent of GDP annually.
Researchers at the time noted, however, that Estonia ranked lower in some other e-government indices than its reputation suggested. There is no central database in Estonia. Data sits in different systems and is linked through a secure exchange layer called X-Road. Residents can log in to the state portal and see which institutions hold and have accessed their information.
Can a country rely on electronic systems alone?
The experience of countries that went digital early suggests it is risky to do so without a fallback. Estonia learnt this the hard way. It was hit by a massive cyberattack on April 27, 2007 that lasted 22 days.
The attack shut down government, bank and media websites in a country with no paper backup. In June 2017, Estonia signed an agreement with Luxembourg to set up the world's first data embassy, whose central objective is to safeguard the continuity of state functions by keeping key government data and systems accessible.
Power failures pose a similar threat to payments. When a blackout hit Spain and Portugal in April 2025, cash replaced card payments for a few hours and shops accepted only cash. Many ATMs were down because of lost connectivity or exhausted backup batteries, and some taxi drivers could not take card payments.
Pakistan's own record on data protection will be watched closely. In March 2024, a Joint Investigation Team told the interior ministry that the credentials of as many as 2.7 million citizens had been compromised in a NADRA data leak.
The National Cyber Emergency Response Team (PKCERT) has also warned that login credentials of more than 180 million internet users in Pakistan were stolen in a global data breach. In October this year, the National Cyber Crime Investigation Agency arrested a bank branch operations manager in Arifwala, who allegedly used his authorised access to NADRA's Verisys identity-verification system to pass information to online fraudsters.
An NCCIA briefing to the Senate Standing Committee on Information Technology said a separate network had been selling call records and NADRA-linked personal data. A Tribune editorial last year pointed to phishing scams that had defrauded parliamentarians of millions of rupees.
Privacy and data exploitation
Privacy is the other major concern. A European Central Bank (ECB) working paper says digital payments, unlike cash, generate troves of data that reveal information about those making and receiving payments.
The paper also points to firms that have captured the customer front end of digital payments, and therefore the data, which amplifies concerns about market power and the lack of privacy. Taiwan's central bank has cautioned that if non-cash payments are concentrated in a few private institutions, it could create risks of monopoly and exploitation of users' rights.
Central banks acknowledge the limits of what they can promise. ECB President Christine Lagarde has said a digital currency will never be as anonymous as cash, and that the ECB is working on a "Cash Plus" option to emulate cash privacy as closely as possible. An ECB survey found that over three-quarters of respondents believe strong data privacy should be a key feature of the digital euro.
Taiwan's central bank has said cash remains an irreplaceable payment method in the short term, and that it would ensure an adequate supply for as long as the public needs it. The common thread across these experiences is that digital payments can bring transparency and efficiency, but countries that have gone furthest are now insisting on a cash option, backup systems and strong data protection alongside them.
