Bait-and-Switch: A Playbook to Increase Financial Surveillance

Pakistan is giving discounts on card transactions right now. On the surface, this looks like a win for the consumer: pay with a card, save a little money. But this is not a gift. It is bait. And once the trap closes, the temporary discount disappears while the permanent infrastructure of surveillance remains.

Why the state wants you on digital rails

Pakistan's economy has a structural problem, at least from the state's perspective: too much of it is invisible. The informal economy is estimated to constitute around 59% of GDP, roughly Rs 67,668 billion, and about 72.5% of workers outside agriculture are employed informally. None of this activity is tracked, and almost none of it is taxed. Pakistan's Tax-GDP ratio sits at a mere 10.2%, among the lowest in the region.

The state's solution isn't to chase down every roadside vendor with an audit. It's to make the vendor's customers do the work for them. By subsidizing card usage and building out digital payments rails like Raast and mobile wallets, the government is quietly converting an untraceable cash economy into a fully traceable digital one, one transaction at a time. Digital transactions grew 35% in 2024 alone. Every Jamshed Tikkay wala who starts accepting cards because his customers now prefer the discount is a vendor who has just been pulled into the tax net, whether he agreed to it or not.

The consumer discount is not the point. It is the mechanism. You are the vector.

India already ran this experiment

This playbook isn't hypothetical. India ran it in real time. On November 8, 2016, the Indian government announced demonetization, scrapping 86% of the country's currency notes by value overnight. The stated justifications were curbing black money, fighting counterfeit currency, and pushing India toward a digital economy.

The stated goals failed. The RBI later reported that 99.3% of the banned notes returned to the banking system, meaning the black money the policy was supposed to destroy simply came back through the front door. What didn't reverse was the digital infrastructure built in demonetization's wake. India ended up with a durable architecture of transaction tracking and behavioral data collection that persists years after the currency shock that justified it. The black money survived. The surveillance infrastructure did not go away.

That is the pattern to watch for: a crisis or an incentive gets the public to adopt a new financial rail, the stated policy goal quietly fails or becomes irrelevant, and the tracking infrastructure stays permanently in place.

China shows where this scales to

If India shows the transitional phase, China shows the finished product. The People's Bank of China's Digital Currency Electronic Payment system, DCEP, gives the central bank the ability to monitor transactions in real time or near real time, a level of financial visibility no other country's banking system currently offers.

The official justification is the same one you hear everywhere: better monetary policy, easier detection of money laundering and terrorism financing. But the same architecture that enables those goals also feeds directly into China's social credit system, where financial behavior can be rewarded or punished as part of a broader system of behavioral control. The technical capability for surveillance and the technical capability for control turn out to be the same infrastructure, just pointed at different ends.

"Digital" is not a synonym for "progress"

Central bank digital currencies and their supporting rails are marketed as financial inclusion, faster settlement, lower friction. All of that can be true and still not be the point. The same architecture that speeds up your payment also creates a permanent, queryable record of who you are, what you bought, when, and from whom. CBDCs and digital-payment infrastructure introduce real political, ethical, and cybersecurity risks: financial surveillance, erosion of privacy, transaction monitoring, and expanded governmental reach into the economic lives of citizens. None of that is a side effect. It is the design.

The Pakistan-specific risk: NADRA

Pakistan has one thing India didn't have at the same stage in 2016: a mature national identity database already linked to biometric verification. NADRA already ties your CNIC to your identity in a way that's used across banking, SIM registration, and property records. Layer a fully digital, fully traceable payments system on top of that identity infrastructure, and every transaction becomes not just trackable, but immediately and permanently linkable to you personally. That combination, identity infrastructure plus transaction infrastructure, is precisely what enables the kind of real-time financial visibility that China has already built and that India is still assembling piece by piece.

The trade you're actually making

The discount on your card is temporary. Every incentive program like this has a limited shelf life, typically a few years, calibrated to be just long enough to shift consumer and vendor behavior past a tipping point. Once enough vendors have card terminals and enough consumers have habituated to digital payment, the discount is no longer necessary to sustain adoption, and it will be quietly withdrawn.

What won't be withdrawn is the infrastructure. The payment rails, the transaction logs, the identity linkages, the tax reporting pipelines, all of that stays. You will have traded a few years of marginal savings on your card purchases for a permanent surrender of the financial opacity that cash used to give you by default.

None of this means cash is a long-term solution, or that formalizing an economy this large and this informal is inherently wrong from a fiscal policy standpoint. Pakistan's tax base genuinely is too small, and an economy this informal genuinely does create real problems for the state's ability to function. But that is a separate argument from the one being made to consumers right now. The pitch is "save money on your card." The actual transaction is "give up financial privacy in exchange for a discount that will not last." Know which trade you're actually making before you make it.