Fintech, a rapidly evolving ecosystem leverages technology to enhance and automate the delivery of financial services. It aims to streamline financial transactions for both individuals and businesses, making these services more accessible and cost-effective. 

Often pioneered by startups, fintech aims to disrupt established financial systems and compete with traditional corporations that are less reliant on software. One common manifestation of fintech is in the form of digital wallets, also referred to as mobile wallets, which serve as digital substitutes for traditional wallets. They enable users to store money, make transfers, and conduct payments using mobile devices. With features like online purchasing, bill settlements, and seamless money transfers, mobile wallets have surged in popularity, particularly with the rise in cellphone usage.

For Pakistan, the emergence of digital wallets represents a transformative breakthrough by eliminating the necessity for in-person visits to banks and streamlining extensive documentation procedures. This transition promises to amplify financial accessibility for women, thereby making substantial strides towards their financial inclusion and economic empowerment. In this blog post, we explore the transformative potential of mobile wallets in Pakistan, analyze how they contribute to financial inclusion, examine strategies for harnessing their capabilities to enhance women's financial independence, and discuss the extent to which they can empower Pakistani women. Through an exploration of current trends and future outlook, we aim to highlight the pivotal role of mobile wallets in advancing gender equality and financial empowerment of women in Pakistan.

Harnessing Mobile Wallets to Make Women Financially Independent

In the last decade, Pakistan's digital financial sector has undergone significant growth due to enhanced high-speed internet access, widespread mobile phone usage, and a considerable population under the age of 30. 

The debut of EasyPaisa in 2009 marked the inception of mobile wallets in Pakistan. Since then, various players such as JazzCash, NayaPay, and SadaPay have entered the market, all striving to provide convenient digital financial services (DFS) to consumers. Additionally, the Federal Government of Pakistan is exploring the idea of introducing the National Digital Wallet to promote digital payment methods. These digital wallet services aim to especially benefit the underbanked and unbanked populations, especially women, 68% of whom are estimated to be are unbanked.

Mobile wallets serve as an ideal option for Pakistani women seeking to utilize banking services even if they do not have a bank account. By reducing dependence on cash, mobile wallets can bolster the financial security of these women while concurrently mitigating risks related to cash transactions, such as fraud, loss, and theft. 

Mobile wallets can afford women increased autonomy over their finances, mitigating the risk of spousal control and the insecurity associated with carrying physical currency. Mobile transactions can potentially alleviate the necessity for physical mobility, enabling women to access financial services via their mobile devices irrespective of their geographical location. In 2022, the former SBP Governor, Dr. Reza Baqir, emphasized the role of digital wallets in addressing gender disparities in the financial sector. He commended initiatives like the Asaan Digital Account for providing swift, cost-effective, and user-friendly solutions, effectively dismantling barriers to financial inclusion for women.

Participation in the digital economy through mobile wallets can offer another avenue for women's empowerment. Mobile wallets facilitate online purchases, help formalize businesses, improve access to credit, expand customer bases, and help women expand the  economic opportunities that are available to them. 

Why Aren't Women Adopting Digital Wallets?

Despite the potential benefits of digital financial services, women's ownership of mobile wallets remains relatively low, with less than 28% of mobile wallets owned by women. This disparity can be attributed to various barriers on both the demand and supply sides, including limited access to and utilization of mobile phones and the internet among women. 

In a recent survey conducted by the World Bank across 135 nations, Pakistan emerged as one of the countries with the lowest levels of female financial inclusion, ranking fourth from the bottom globally. The World Bank's Findex database, which tracks financial service usage, highlights a significant gender gap: a mere 13% of women possess personal bank accounts compared to 28% of men. Furthermore, there is a notable disparity in CNIC possession between genders, with a higher percentage of men (89.65%) owning a CNIC compared to women (74.19%). Notably, a significant portion of women (25.81%) does not possess a CNIC. 

The realization of the benefits hinges on women having access to mobile phones, a privilege often curtailed by societal norms. Shockingly, reports of violence against women solely for possessing mobile phones have surfaced in Pakistan. The Financial Inclusion Insights Survey of Pakistan reveals that 18% of female non-users abstain from using phones due to familial restrictions, highlighting the pervasive influence of cultural beliefs on phone usage patterns.

The potential for digital wallets to enhance financial inclusion among women is hindered by their limited access to mobile phones. Surprisingly, only 13% of women purchase their own phones, largely due to mobility and financial constraints, in stark contrast to the 89% of men who do. Women often depend on male relatives to access phones, further restricting their independence in this area. Additionally, only 21% of all Pakistani mobile subscribers are women. Accurately determining women's ownership of mobile phones, particularly smartphones, poses a challenge as often the device is registered under the name of a woman's husband, brother, or father, even if it is intended for her use. Nevertheless, available data suggests that at least 50% of women in Pakistan possess a mobile phone, with 22% owning a smartphone.

Although there have been fluctuations in women's smartphone ownership rates over time, ranging from 18% of the total adult population in 2019 to 22% in 2020 and 21% in 2021, the gender gap in smartphone ownership has remained steady at 18% throughout this period. Figure 1 represents this.

Figure 1: Smartphone ownership as a percentage of total population, 2019–2021 (Source: GSMA Consumer Surveys 2019-2021)

Figures 2 and 3 illustrate the gender disparity in mobile wallet adoption across age and education levels in 2022, providing additional evidence of the predominance of male ownership and usage of mobile wallets. Despite there being a noticeable difference in mobile wallet adoption across age groups and educational backgrounds, the smallest gap is observed for ages 55 and above and those with higher education, the surge in uptake is predominantly higher for men suggesting that gender is the most decisive factor in the variation in adoption. 

Figure 2: Gender Disparities in Mobile Wallet Adoption Across Age Groups, 2022 (Source: Karandaaz Financial Inclusion Survey (KFIS))

Figure 3: Gender Disparities in Mobile Wallet Adoption Across Education Levels, 2022 (Source: Karandaaz Financial Inclusion Survey (KFIS))

The multifaceted roles women fulfill in their households often relegate attaining access to financial services to a low priority. This is especially pronounced in rural areas, where women encounter barriers such as limited awareness and financial literacy, lack of trust in formal institutions, inadequate gender-focused initiatives by banks and financial entities, lack of formal documentation, and familial responsibilities or disapproval.

The most prominent barriers though remain familial disapproval as well as lack of financial and digital education amidst women. According to Karandaaz Financial Inclusion Survey, women typically score lower on both financial literacy index (average of 44 compared to 62 for men) and digital literacy index (average of 38 compared to 57 for men). These indices range from 0 to 100, where higher scores indicate greater levels of financial and digital literacy.

Future Outlook

It is evident that many women face significant challenges in navigating the formal financial system, including limited access to services and inadequate financial literacy. Educating women about mobile wallet functionalities and providing tailored financial literacy programs are crucial steps in enhancing their confidence and usage of these platforms. Moreover, fostering partnerships with community-based organizations and local leaders can ensure that initiatives address the diverse needs of women across different contexts. 

Addressing the constraints facing women's mobile wallets requires concerted efforts from both public and private sectors. Key players like SadaPay and JazzCash have a pivotal role to play in leading these efforts. Initiatives such as direct transfers, as implemented in India, into women's mobile wallet accounts have shown promising outcomes in incentivizing women's engagement with financial services. Drawing inspiration from successful models, collaborative action within the Fintech sector can introduce gender-targeted transfers, thereby reshaping social norms and empowering women financially. Ultimately, such collaborative efforts yield meaningful progress toward inclusive financial practices, with benefits extending to women and society in general.

Eeman Shahzad Qureshi is a Teaching Fellow at the CNM Department of Economics (LUMS). 
Rimsha Arif is a Teaching Fellow at the CNM Department of Economics (LUMS).