Should countries trying to achieve financial inclusion consider leveraging a regional approach? Payments systems historically have operated at a country level as there tends to be a sovereign or national orientation towards key characteristics, including:
- Currency: Most countries have a fiat sovereign currency and use it as the only legal tender for transactions.
- Regulation and Oversight: Central Banks have important oversight responsibilities over payments systems and in many cases, operate the platform, or participate in an association that operates the platform.
- Language: Until very recently, most information systems were based in only one language. Moreover, different alphabets also pose certain challenges.
Countries should recognize these national orientations while also considering the benefits of multinational or regional approaches:
- Cross-Border Payments: A regional approach may more easily support cross-border low value payments. This is often a key factor in cross-border trade and economic development.
- Shared Infrastructure: Shared infrastructure can drive costs down. In some cases, multiple country infrastructures can cooperate and provide redundancy services for the regional network as a whole.
- Scale: Regional systems are likely to experience higher volumes of transactions, helping the real-time retail payment system achieve the scale it requires to operate efficiently, and drive down costs while delivering maximum security and fraud management capabilities.
Next Topic in this Section: Expanding and Connecting Markets: A Pan-Africa Payment Network