Karachi: Visa (NYSE: V) has released a whitepaper emphasizing the benefits of digitizing SME payments. The report highlights over $121 billion in SME B2B transactions ready for digital transformation.
Umar S. Khan, Visa’s Country Manager for Pakistan & Afghanistan, stated that SMEs contribute 40% to Pakistan’s GDP and play a crucial role in job creation. However, many SMEs still rely on cash transactions, which limits efficiency and growth. He stressed that digital payments could revolutionize business transactions through commercial cards, offering streamlined processes and better financial management.
Visa’s report advocates collaboration between government entities, banks, and fintechs to promote commercial card adoption. These initiatives align with Pakistan’s digital and economic growth goals, helping SMEs compete locally and globally.
Pakistan’s Payment Landscape
The State Bank of Pakistan’s first-quarter review for 2025 reported 55.6 million payment cards in circulation, with 88% being debit cards. Despite the growing use of cards, most SME transactions remain cash-based. Many businesses are unaware of commercial card benefits, while banks hesitate to offer credit due to SMEs’ lack of collateral and credit history.
Key Findings from Visa’s Whitepaper
Visa’s whitepaper reveals that 85% of Pakistan’s estimated $255 billion B2B payment flows in 2022 were cash-based, leading to inefficiencies. Only 15% of SME B2B payments are currently digital, showing room for improvement. Most card transactions still involve cash withdrawals. SME payables are dominated by agriculture, retail, and manufacturing, while IT sector transactions are largely international.
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Advantages of Commercial Cards
SMEs contribute over $121 billion in B2B transactions, making them ideal for digital payment solutions. The largest 8% of SMEs handle 60% of SME payables, indicating high transaction volumes. Small-value transactions total around $6 billion, making commercial cards a secure and practical solution. These cards provide benefits such as interest-free working capital, cross-border trade simplification, business credit building, and real-time expense tracking.
Creating a Supportive Ecosystem
Visa suggests policy changes to encourage commercial card adoption, including reducing collateral requirements by developing alternative credit-scoring models. It also recommends setting minimum issuance quotas for commercial cards, focusing on SME accounts, and streamlining foreign exchange processes for B2B transactions, including tiered limits for international transactions and automated data consolidation.
Encouraging Digital Adoption
Visa recommends that issuers take proactive steps to drive commercial card usage by developing advanced card management systems integrated with SME platforms. Conducting awareness campaigns about commercial card benefits, partnering with fintechs to expand credit access, and offering low-risk corporate debit card options for SMEs hesitant to transition are also crucial steps.
Visa’s whitepaper underscores the potential of commercial cards in transforming SME transactions, boosting efficiency, and unlocking new financial opportunities. Issuers can gain from increased B2B transactions while gathering valuable customer insights for better financial services.
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