Cheaper Remittances Eyed for Pakistan’s Europe Flows
Pakistani banks are exploring cheaper remittances routes from Europe, aiming to cut the cost of sending money home and keep more of the revenue inside Pakistan’s banking system. The push comes as remittances from European countries climbed to $5.22 billion in FY26, up from $4.54 billion in FY25 and $3.85 billion in FY24, according to State Bank of Pakistan figures.
Germany, France, the Netherlands, Italy, Spain, Sweden, Greece, Denmark, Belgium and Ireland are among the main sources of these inflows. An estimated 1.2 million to 1.5 million Pakistanis live across these countries, and their transfers have become a steady and growing flow.
The change is still in progress: banks are preparing routes and partnerships, not announcing a single launch date.
How the direct model would work
Speaking exclusively to ProPakistani, Bruno Pedras, founder and chief executive of Belmoney, said Pakistani banks were preparing to adopt a direct-to-customer model through partnerships with licensed fintech companies.
Under the current setup, local banks and money transfer operators often earn relatively low margins. International providers keep a large share of transaction fees, leaving Pakistani partner banks with a smaller portion for delivering funds. Banks also struggle to reach European customers directly, lacking the technical infrastructure and local market presence in those countries.
A direct model would change that balance. Banks would work through fintech partners that already hold licences and market access in Europe, serving senders directly instead of going through a large international operator such as Western Union, Ria, Wise, Remitly or MoneyGram.
Pedras said Belmoney provides regulatory compliance and market access services to banks, money transfer operators and digital wallets. The company is integrating its services with one of Pakistan’s largest digital wallets, with the integration expected to go live soon. He added that several Pakistani banks had signed agreements with Belmoney, which could help them attract customers who now send money through international operators.
The objective is to keep more remittance-related revenue inside Pakistan’s banking system.
Why the timing matters
The government allocated Rs120 billion in remittance subsidies in FY26, when total inflows reached a record of about $40 billion. That allocation was cut to Rs16 billion for FY27, alongside the Pasban Remittances Cash Reward Scheme for regulated channels.
That shift makes cheaper private routes more important: if banks move money at lower cost through technology, they will depend less on subsidies to keep formal channels attractive. Industry estimates put the annual saving from several low-cost channels at about $410 million, depending on how widely they are used.
A wider policy change sits behind the push. On July 1, 2026, the State Bank ended two incentive schemes: the Telegraphic Transfer Charges Incentive Scheme, which reimbursed banks and exchange companies for transfer charges, and the Sohni Dharti Remittance Programme, which rewarded overseas Pakistanis for using formal channels. Transfers remain free for customers under central bank directions, but banks no longer receive the old reimbursements, sharpening the need for low-cost routes that work without subsidy support.
Financial expert Ibrahim Amin added that the State Bank was also working with the BUNA regional payment platform to ease remittances from Gulf countries.
What overseas Pakistanis should watch
Three practical points will show whether the cheaper routes deliver: the fee a sender actually pays, the speed and reliability of transfers, and whether the new routes reach smaller towns and villages, not only major cities.
Banks must also beat informal Hawala and Hundi networks on convenience, charges and incentives, Amin said. A cheaper formal route only helps if senders trust it and use it.
The stakes are visible in the wider economy. Remittance inflows support household spending and foreign exchange reserves, recently put at about $21.5 billion. The SBP policy rate rise to 12 per cent and the rise in reserves to $21.52 billion show a central bank managing tight conditions, while reserves are projected to reach $25 billion by June 2027. Gulf inflows of $188 million into domestic bonds in nine days and 30,000 visas a month for Pakistanis heading to the UAE show the same larger flow of people and money.
Are remittances from Europe growing?
Yes. State Bank figures put European remittances at $5.22 billion in FY26, up from $4.54 billion in FY25 and $3.85 billion in FY24.
