Point-of-sale (POS) payments in Pakistan experienced a significant decline of approximately 50% following widespread protests triggered by the arrest of former prime minister Imran Khan. The protests led to the shutdown of mobile internet services, exacerbating the decline in digital transactions.
What is POS? A point of sale (POS) is a place where a customer executes the payment for goods or services and where sales taxes may become payable.
POS in Pakistan
Pakistan’s major payment system operators, 1LINK and Habib Bank Limited, attributed the slump to the suspension of mobile broadband and reduced footfall at open stores amid the political unrest.
The protests, which have caused disruptions in commercial activities across the country, resulted in the closure of major roads and businesses, particularly in Lahore, Pakistan’s second-largest city. The interior ministry ordered the continuous suspension of mobile data services since Tuesday night, marking the longest such shutdown in Pakistan’s history. The government often employs communication suspensions as a measure to quell unrest.
Although cash transactions continue to dominate commercial activities in Pakistan, digital payments have rapidly grown. However, the protests have brought many retailers and industrialists to a standstill since their initiation on Tuesday.
In addition to the impact on POS payments, the suspension of mobile broadband and social media platforms has also resulted in significant economic losses. The demand for virtual private networks (VPNs) surged by 1,329% on Wednesday compared to the average, indicating the widespread desire for continued access to social media. Simon Migliano, Head of Research at Top10VPN, estimates that the suspension has cost the country nearly $100 million so far.
Economic losses during 3 days of Internet shutdown in Pakistan
- International payment card transactions on 1LINK’s platform saw a 45% volume decrease and a 46% value decrease on May 10 compared to the daily average during the week of May 1 to 7.
- PayPak, the domestic payment scheme, experienced a 52% volume decline and a 56% value decline in transactions.
- Habib Bank Limited reported a 60% decrease in the throughput of POS machines, which hold a market share of over 30%.
- The telecom sector suffered a loss of approximately PKR 2.46 billion in three days.
- The government’s tax revenue from mobile broadband services amounts to PKR 280 million, resulting in an estimated 860 million loss in tax revenue to the telecom industry.
- Online platforms, including social media, have been inaccessible, impacting various industries such as online businesses, education, and transportation services like Uber and food delivery.
- Around 150,000 registered online riders and 12,000 hotels offering online delivery have been affected.
- Approximately 90,000 points of sale in Rawalpindi and Islamabad, facilitating online payments, experienced a decline in business.
- The IT sector faced significant losses, with an estimated ten billion loss to the industry in just three days, exceeding the average daily turnover of twelve million dollars.