This paper uses the decision tree methodology to assess the potential demand- and supply-side constraints limiting the usage of digital payment services in Pakistan. The main finding is that Pakistan's institutional weaknesses, including a large informal economy and a withholding tax on financial transactions, are the most important binding constraint. The demand-side constraints, such as low technical literacy and social exclusion of women, are also severe for specific subpopulations. However, the paper concludes that these constraints are not as severe for the overall population.
