Page 45 - ITU-T Focus Group Digital Financial Services – Interoperability

ITU-T Focus Group Digital Financial Services
Interoperability

Policy dialogue

31. The central bank should promote an active policy dialogue with all payment system stakeholders,
including users. The dialogue should secure a fair representation of all relevant public and private interests
involved in payment activities, and should offer a channel for the central bank to communicate its policy
orientation and collect stakeholder views. The central bank should undertake consultations with payment
system stakeholders on policy issues and options to mobilize knowledge, raise awareness, and build consensus
around policy decisions. Thus, where practicable, the central bank and payment system stakeholders should
agree on solutions to be adopted.
Inducing change

32. However, oversight should be conducted in the shadow of the powers granted by the law. Therefore,
oversight powers should be used where necessary to effect change. In cases where stakeholders fail to act in
ways that are consistent with the interests of the payment systems and the collectivity in general, the central
bank, in full respect of its legal powers, should exercise the authority to impose the actions it deems necessary.

Payment System Interoperability

A. Relevance of interoperability

33. Interoperability of payment systems is important because of its effect on consumers, businesses,
and the economy in general. In advanced markets and where scale has been achieved, interoperability
helps businesses to manage costs, increase efficiency through shared infrastructures, and expand transaction
volumes. Customers benefit from network effects and lower transaction costs. Governments believe that
interoperability may greatly facilitate financial inclusion and reduce the costs associated with traditional cash
and paper-based payment instruments.

34. Interoperability can help to achieve a number of strategic payment system objectives. It can enable
cost-efficient payments to and from the unbanked population. Distributing physical cash to the unbanked (e.g.,
through salary payments or government welfare programs) remains expensive and insecure. Governments,
businesses, and other large bulk payers should be able to use electronic payments (e.g. e-money, including
mobile money) as a cost-efficient and reliable payment channel to reach this population. Industry collaboration,
including interoperability, can facilitate these large bulk payments more efficiently. Interoperability also
facilitates the use of these electronically received funds from customers without easy access to a physical
bank branch. Second, interoperability may facilitate the replacement of cash with electronic means of payment
in day-to-day transactions. The current use of e-money is still dominated by a money transfer followed by
cash-out. By providing tailored solutions for retailers, and establishing interoperability with existing and future
retail payment infrastructures, operators can expand the use of e-money. This would reduce cash conversions,
provide convenience for customers, lower costs for operators, and increase the relevance of e-money. However,
introducing interoperability alone (be it on a voluntary basis or by regulation), does not ensure that a market
can reap all potential benefits – the timing and certain other environmental factors (e.g. the market share of
individual providers) seem to be important factors when it comes to the success of interoperability – some of
these aspects are discussed in other deliverables of the working group. The CPMI-WBG Payment Aspects of
Financial Inclusion Report addresses the basic foundations and catalytic pillars for the universal access to and
usage of transaction accounts comprehensively, to which interoperability can contribute.

In the context of electronic payments, the taxonomy of interoperability is extensive and several different types
of interoperability have been defined in the existing literature.
• Platform-level interoperability: Permits customers of one PSP to send money to customers of another
PSP.

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