The ITU aims to facilitate interoperability for digital financial services, and has issued two reports on the issue that focus on two distinct areas: access to payment infrastructure, and the development of national payment systems (NPS).
Interoperability enables users worldwide to make electronic payment transactions with any other user – regardless of their service provider – in a convenient, affordable, fast, seamless and secure way via a single transaction account. However this remains a challenge in some of the world’s poorest countries where very few mobile payment schemes are truly interoperable. Yet, with as many as 2 billion people globally being either un-banked or underbanked, interoperability is a critical factor in the drive to achieve global financial inclusion.
Consequently, interoperability is a key work stream within the ITU’s Focus Group on Digital Financial Services, established to develop and disseminate best practice guidelines for policy and decision makers, operators and providers in the digital financial services sector.
‘The challenge can be quite complex involving a number of different entities’, said ITU Secretary-General Houlin Zhao. ‘Today we have published two reports to help address these interoperability challenges. We want to encourage the development of competitive payment systems that deliver fair access to their services. We also want to see national payment systems driving collaboration and innovation to benefit a broader range of stakeholders.’
The first report, ‘Access to Payment Infrastructures’, analyzes access-to-payment-infrastructure issues around the world, and how these can affect the development of safe, efficient, interoperable and financially inclusive payment services. The report focuses on non-banks that are playing an increasingly important role in payments, including the provision of payments services directly to end-users. Yet, despite their increasing importance in helping to address financial inclusion, many are still not accepted as direct participants of key payment infrastructures. This often leads to limited interoperability in the services/products they can offer. The report concludes that if a payment services provider (PSP) adheres to international standards and best practice, and establishes risk-based and objective access criteria, non-banks should be able to join as a direct participant.
Sacha Polverini, Chairman of the Focus Group and Senior Programme Officer of the Bill & Melinda Gates Foundation’s Financial Services for the Poor program, said: ‘Payment system regulators and policy makers, in particular Central Banks who typically act as the lead payment system overseer in each country, can better support the poorest and most vulnerable segments of the population by promoting a competitive and dynamic payment services industry which includes non-traditional providers’.
The second report, ‘Cooperation frameworks between Authorities, Users and Providers for the development of the National Payments System’, analyzes the role and cooperation process of key stakeholders in the development of NPS, in particular retail payments. NPS have been designed in many countries to increase the overall efficiency of payment systems and to promote financial inclusion. However due to the many different stakeholders involved and the complex nature of NPS, the development of such frameworks can be challenging. This report has therefore identified the role public and private sector actors can play as well as discussed the structure of these cooperation frameworks in order to advance financial inclusion globally.
These reports are the first outputs produced by the Working Group on Interoperability. They follow six reports, which were published earlier this year that focused on the DFS ecosystem, consumer protection, and on technology, competition and innovation. The Focus Group will publish its remaining results throughout the rest of the year to complete its roadmap.