The federal government is considering allowing tier-2 merchants a tax break of at least 5 years.Sources said that this was discussed in a meeting chaired by the State Minister for Finance and Revenue and officials of the Ministry of Finance. The State Bank of Pakistan, the Ministry of Information Technology, and the Federal Board of Revenue also participated in the meeting.

Sources informed ProPakistani that the government can also introduce a phased tax exemption plan, where the tax break is reduced gradually over five years, allowing merchants to adjust to the new system progressively.The meeting also discussed that the government should move towards zero pricing on Raast Person to Merchant (P2M) transactions for receiving merchants.A key initiative in this direction is to enhance the capabilities of financial institutions to leverage merchant transaction data, thereby enabling their entry into the data-based lending business.

Regulatory and policy efforts towards establishing robust data protection and data-sharing protocols must be initiated, sources added.The State Bank officials informed that about 84% of the transactions in Pakistan are still over the counter, which should be enforced to be converted into account-based or wallet-based payments.The central bank also proposed that government departments should start collecting digital payment methods by removing alternatives like over-the-counter payments.