1 December 2022

4 key challenges and approaches to building inclusive digital payments

The image above is what an inclusive digital payments ecosystem looks like and a report by the Better Than Cash Alliance for the G20 Global Partnership for Financial Inclusion addressed the 4 challenges and suggested approaches to building an inclusive digital financial environment. These were

1. Explicit multiple stakeholder management.

This should entail joint agreements by all relevant stakeholders on the establishment, objectives, and oversight of an inclusive digital payments ecosystem, as well as the use of coordinating forums to ensure appropriate management of digital payment services. Constant measurement and evaluation is needed, including user feedback, on the performance of the ecosystem in terms of levels and types of use, whether user needs are being met, and on general accessibility. This evaluation should be used to ensure that adjustments are being made to improve the service offering.

2. Enable innovation in the establishment of an inclusive digital payments ecosystem while ensuring consumer protection.

The multiple stakeholder management and measurement and evaluation mentioned should be used to facilitate and monitor innovation, and strike an appropriate balance between protecting users and other stakeholders.

3. Build trust in, and use of, digital payment services.

Use of the ecosystem should be increased through active measures to broaden product appeal and by a sustained advocacy campaign that increases awareness of available or developing payment services, and the advantages of those services. Transparency around the cost and service conditions of using the ecosystem’s payment services is crucial in getting users to trust the system. Establishing effective risk management frameworks to deal with risks to both end-users and service providers is an essential step in establishing trust and promoting use.

4. Establish a proportionate regulatory framework that is appropriate to the market context.

There is no standard blueprint for regulation or oversight, which implies that every country will need to develop its own approach that takes into account both the current state of the market and how it wants to achieve a digital, financially inclusive economy.

The establishment of an inclusive digital payments ecosystem is a complex process and explicit and coordinated management is necessary to achieve the desired outcome of increased and beneficial use of the payment system. This requires an agreed-upon approach and active oversight during the ecosystem’s development and operation. In crafting an approach to an inclusive digital payments ecosystem, the particular characteristics of the country (or region) should be taken into account. In this context, it is crucial that as policymakers take a leadership role all stakeholders are fully involved. Commitment from all parties is required to ensure progress. Government use of the payment services on offer is crucial to increase familiarity and demonstrate the benefits of payment services, and to demonstrate commitment to these payment services. All government entities involved in government-to-person, government-to-business, person-to-government, and business-to-government should fully use the payment ecosystem being established.

Download the report here on Building_Inclusive_Dig_Payments_Ecosystems.