This report by Karandaaz Pakistan explores the urgent need to digitize e-commerce payments in Pakistan, where cash-on-delivery (COD) continues to dominate despite the rapid growth of the sector. While Pakistan’s e-commerce market reached a revenue of $5.2 billion in 2023, only a small fraction of transactions are conducted via digital payment methods and card-based transactions account for merely 5% of total e-commerce volume.

Drawing on data from national payment systems and insights from a stakeholder workshop held in September 2024 with participants including Daraz, Bykea, BookMe, FoodPanda, GoLootlo, and the State Bank of Pakistan’s Raast team, the report highlights the friction and inefficiencies caused by COD. These include high operational costs, trust issues, delivery refusals, and logistical delays. In contrast, digital payments offer increased transparency, reduced costs, and improved cash flow for businesses while also enhancing consumer convenience.

This white paper provides actionable insights on digital payments for e-commerce businesses that can help streamline efficiency for both customers and businesses.