ISLAMABAD: Pakistan has launched its first-ever cashless weekly market in Islamabad, a major step toward digitizing the economy, but slow Internet speeds and patchy phone connectivity are hampering adoption among vendors and shoppers, they said this week.

The initiative is part of the government’s plan to turn Islamabad into Pakistan’s first fully cashless city, using QR-code payments to formalize retail transactions, reduce tax evasion and improve documentation in one of South Asia’s most informally run economies.

Pakistan relies heavily on cash, enabling widespread tax evasion and limiting financial transparency. Economists say expanding digital payments can raise government revenues, curb corruption, and make marketplaces safer for customers and traders. The new cashless Sunday bazaar in Islamabad is the government’s most visible attempt yet to bring millions of informal-sector transactions into the formal economy.

Authorities have installed QR codes at every stall in the H-9 Sunday market, enabling shoppers to scan and pay directly through mobile apps for fruits, vegetables, groceries, used clothing and other goods.

“It’s good. A customer just scans [the code] and money is transferred easily,” said Mubarak Ali, who sells vegetables. 

But he acknowledged the transition was slow because “the concept was new, so they have limited number of customers using the facility.”

For many customers, the biggest barrier is not willingness but Internet speed.

“They have Internet [speed] issues,” said shopper Muhammad Sultan. “Your Internet does not work. Now see I am trying to open this app but it is not functioning.”

Vendors dealing in non-essential items echoed the concerns.

“There is a huge issue of Internet. Internet is not working here,” said toy seller Suhail Safdar. “The customers who come here, when they send money, we go outside and hold out our mobiles, but it still doesn’t work.”

Others said digital transactions make them feel more protected from theft.

“When I came here for the first time, my wallet was stolen. It had Rs10,000 ($36), my driving license and other items,” said Nazia Kauser. “Now, this [cashless system] is the best… this is very good now and I want this system to remain in place.”

But security concerns remain, especially amid large crowds.

“There is such a big crowd here… someone takes out our phone [from our pocket] and flees,” said Abdul Basit, a government employee. “So, we need surveillance and security here.”

The Islamabad Metropolitan Corporation says glitches are temporary.

“On the prime minister’s directives, a free wifi connection is being installed here,” said Kamran Raza, the official overseeing the market. “An NTC team is working and God willing, it will be resolved within 10 to 12 days.”

He said digital payments offer much greater safety.

“Customers can bring the phone and pay instead of carrying cash, while vendors, who used to carry cash back home in the evening, also feel safe from mugging,” Raza said.

The project comes as Pakistan attempts to boost tax collection, targeted at Rs14.13 trillion ($47.4 billion) this fiscal year, by reducing reliance on cash transactions that are harder to document.