PAYMENT SYSTEMS WORLDWIDE A SNAPSHOT - World Bank
PA YMEN T SYS TEM SWOR LDW IDEA SN APSHOTSUMMARY OUTCOMES OF THE FOURTH GLOBAL PAYMENT SYSTEMS SURVEYSEPTEMBER 2018
2018 The International Bank for Reconstruction and Development/The World Bank Group1818 H Street NWWashington DC 20433Telephone: 1 202 473 1000Fax: 1 202 522 2422Internet: www.worldbank.orgE-mail: pubrights@worldbank.orgDISCLAIMERThis volume is a product of the staff of the World Bank. The findings, interpretations, and conclusionsexpressed in this volume do not necessarily reflect the views of the Executive Directors of the WorldBank or the governments they represent.The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors,denominations, and other information shown on any map in this work do not imply any judgment on thepart of the World Bank concerning the legal status of any territory or the endorsement or acceptance ofsuch boundaries.RIGHTS AND PERMISSIONSThe material in this publication is subject to copyright. Because the World Bank encourages disseminationof their knowledge, this work may be reproduced, in whole or in part, for noncommercial purposes aslong as full attribution is given.
ACKNOWLEDGMENTSThis study “Payment Systems Worldwide: A Snapshot” presenting the outcomes of the fourthiteration of the World Bank Global Payment Systems Survey is the result of collective efforts ofthe Payment Systems Development Group (PSDG) of the World Bank’s Financial Inclusion,Infrastructure and Access Team of Finance, Competitiveness and Innovation Global Practice.The team was led by Maria Teresa Chimienti, and comprised Karol Karpinski, Goran Amidzic, OyaP. Ardic and Holti Banka. The team would like to thank the peer reviewers Massimo Cirasino, JoseAntonio Garcia, Harish Natarajan, Marco Nicoli, and Doug Pearce.The questionnaire used for the fourth iteration of the World Bank Global Payment SystemsSurvey was developed based on valuable feedback by various colleagues within PSDG, the WorldBank, the IMF, the ECB and the CPMI. The PSDG would like to acknowledge their input andsupport. Finally, the PSDG also wishes to thank each and every central bank that participated inthis effort.
TABLE OF CONTENTSABBREVIATIONS . iiINTRODUCTION. ivI.LEGAL AND REGULATORY FRAMEWORK . 1II.LARGE-VALUE PAYMENT SYSTEMS . 10III.RETAIL PAYMENT INSTRUMENTS AND SYSTEMS . 19IV. SETTLEMENT OF FOREIGN EXCHANGE TRANSACTIONS . 33V.INTERNATIONAL REMITTANCES AND OTHER CROSS-BORDER PAYMENTS . 36VI. SECURITIES SETTLEMENT SYSTEMS . 42VII. PAYMENT SYSTEM OVERSIGHT AND COOPERATION . 47VIII. REFORMING THE NATIONAL PAYMENTS SYSTEM . 52IX. AGENT-BASED MODELS. 56ANNEX I: List of Country Responses to the Global Payment Systems Survey . 62i
d ClearinghouseAlliance for Financial Inclusionanti-money laundering / combating the financing of terrorismAutomated Teller MachineBanque Centrale des Etats de L’Afrique de l’Ouest (Central Bank of WesternAfrica States)Business Continuity PlanBank for International SettlementsCentral CounterpartyCommittee on Payments and Market Infrastructures (formerly CPSS)Central Securities DepositoryDelivery versus PaymentEast Asia and PacificEurope and Central AsiaEastern Caribbean Central BankEastern Caribbean Currency UnionEuropean UnionFirst in, First outForeign ExchangeGulf Cooperation CouncilGlobal Payment Systems SurveyLatin America and CaribbeanInternational Organization of Securities CommissionsMicrofinance InstitutionMiddle East and North AfricaMemorandum of UnderstandingMiddle-income countriesMobile Network OperatorMoney Transfer OperatorNon-Bank Financial InstitutionNon-Bank Finance CompanyNon-governmental OrganizationNational Payments CouncilNational Payment SystemOther Developed EconomyOther Non-Bank Financial InstitutionsOver-the-CounterPoint of SalePayment Systems Development Group (World Bank)ii
PSOPVPPSPRSPRTGSRTOSASSASSSSWIFTT2STRPayment System OperatorPayment versus PaymentPayment Service ProviderRemittance Service ProviderReal Time Gross SettlementRecovery Time ObjectiveSouth AsiaSub-Saharan AfricaSecurities Settlement SystemSociety for Worldwide Interbank Financial TelecommunicationTARGET2-SecuritiesTrade Repositoryiii
INTRODUCTIONPayment systems and remittances represent the foundations of financial sector stability andfinancial inclusion. Payment systems support financial stability by reducing systemic andsettlement risks, acting as firewall to prevent contagion of losses, facilitating proper liquiditymanagement, and through the effective transmission of monetary policy. Also, payment systemsare a critical enabler of financial inclusion. Transactions accounts allow people – including the“unbanked” – to make and receive payments in a cost-efficient way. Payment systems alsopromote economic and financial development: improvements in the national payments systemlead to savings for the overall economy, while financial markets benefit from efficient post-tradeprocessing and the safe custody of securities.In this context, for the last twenty years the World Bank has been supporting national authoritiesin improving national payment systems, in cooperation with private sector stakeholders, througha broad range of financing, technical, and knowledge instruments. Global data is instrumental tobenchmarking and monitoring & evaluation, and helps identify common paths and solutions. Inthis connection, the World Bank launched the Global Payment Systems Survey (GPSS) for the firsttime in 2007, to collect information on the status of payment systems worldwide. Since then, theGPSS has allowed authorities and policy makers to make meaningful cross-country comparisonand assess progress in payment systems development, and has facilitated dissemination of bestpractices.In 2015, the fourth GPSS was expanded to collect information to help assess the readiness of thecountry’s payments system to underpin the World Bank Group Universal Financial Access goaland strategy. Its focus was broadened to include transaction accounts, and analysis is deepenedto cover payment product and business model innovation to enable access. The quantitativemodule (referred to as “Accounts & Access” module) collects data for 2010-2015, facilitatingtrend analyses, and was published in October 2016.This note provides results of the analysis of the qualitative data collected by the fourth GPSS(data as of end of 2015) on the various aspects of national payment systems. The purpose of thisanalysis is to identify trends in the underlying legal, regulatory and oversight frameworks and theinfrastructure foundations that underpin the safe and efficient provision of payment andsettlement services.The GPSS questionnaireTo identify the qualitative features of national payment systems, the GPSS “main” questionnairespans the following areas: (i) legal and regulatory framework, (ii) large-value payment systems,retail payment systems and services, (iii) foreign exchange settlement systems, (iv) cross-borderpayment systems and international remittances, (v) securities and derivatives clearing andiv
settlement systems, and (vi) payment system oversight and cooperation. The questionnaire alsoaims at obtaining information on on-going reforms, and opinions on what are the main factorsthat hinder or facilitate reforms of the national payments system.1 Although not the primaryfocus of this note, the analysis of the qualitative aspects of large-value and retail paymentsystems is complemented by data on number and value of payments collected through the mainGPSS questionnaire.Given the increasing attention paid to expanding access to transaction accounts by nationalauthorities worldwide, an annex on agent-based models was added to the fourth GPSS. In thisconnection, a section of this note also considers selected features of agent-based models. Theanalysis of the “Account & Access” module of the fourth GPSS covering transaction accounts andaccess points was presented in October 2016, and referenced in this note as appropriate.AnswersIn most of the questions, respondents were requested to answer yes or no, or to mark with an“X” all possibilities that may apply. Even though in some cases specific answers provided byvarious authorities did not fully coincide with the information collected in the previous iterationof this survey or in the context of assessments, answers were taken as “given” by respondents tothe extent possible. Solely for comparative analysis, some answers were adjusted based on directknowledge of the systems’ features, and in consultation with the authorities.The survey was carried out through electronic means rather than through in-person interviews;as such, it is not possible to ensure a consistent interpretation of all survey questions. In manycases, respondents were asked to indicate the answer that best reflected their situation; in othercases, they were asked to provide an opinion or make a judgment on a given issue.Data analysisApart from providing information on global trends, this note also aims at identifying trends basedon certain variables to determine whether such variables appear to be related to nationalpayment system features and its overall development. Three such broad economy-levelcharacteristics have been consistently used across GPSS iterations for this purpose, all of whichare considered exogenous to national payments system development include: i) level of percapita income; ii) geographical location; and, iii) population size.2 Accordingly, for sections I1The complete GPSS questionnaire can be obtained from the World Bank’s Payment System Development Group,by sending an email to paymentsystems@worldbank.org.2These and other factors were identified in the CPSS General Guidance for National Payment System Development.More specifically, this report identifies four general factors influencing national payment system development: i)environmental factors, ii) economic factors; iii) financial factors; and iv) public policy factors. Following the CPSSclassification, two of the categories selected for analysis in this paper (geographical location and population size)v
through VIII of this paper, and including the analysis of the annex module on agent-based model,economies were classified into each of these categories: By level of per capita income: economies were classified following the World Bank’sincome classifications: i) high income; ii) upper-middle income; iii) lower-middleincome; and, iv) low income.3By geographical region: developing economies were classified according to the WorldBank’s regional country classifications: i) East Asia and Pacific (EAP); ii) Europe andCentral Asia (ECA); iii) Latin America and the Caribbean (LAC); iv) Middle East andNorth Africa (MNA); v) South Asia (SA); and, vi) Sub-Saharan Africa (SSA). EasternEuropean economies that are also members of the European Union (EU) represent anexception. EU members were further distinguished in two sub-categories: euro areaeconomies and other EU members (that have not adopted the euro). All other highincome economies, to avoid an excessive number of categories with very fewobservations, were classified into a single separate sub-category denominated hereas “other developed economies” (ODE). Annex I shows the list of economies that fallunder of each of these sub-categories related to geographical region.By population size i) large – population over 30 million; ii) mid-size – populationbetween 5 million and 30 million; iii) small – population less than 5 million. WorldBank’s World Development Indicators data on 2015 population were used for thispurpose.Numbers and percentages presented throughout this note, as well as the comparative tables4 arebased on the simple addition of the number of economies in each of the previously mentionedcategories and worldwide totals. Moreover, percentages assigned to ‘developing economies’were derived through a simple averaging of percentages assigned to low-, lower-middle andupper-middle income economies. Similarly, percentages for middle-income economies werederived through a simple average of percentages assigned to lower-middle and upper-middleincome economies. Different weights to each economy based on country-specific characteristicssuch as economic size, territory or other variables are not applied.would fall under the “environmental factors” group, while the “level of income” category would fall under the“economic factors” group.3Two cases deserve special treatment: 1) that of the countries belonging to the Western Africa Monetary Union(BCEAO) comprised of Benin, Burkina Faso, Côte d'Ivoire, Guinea-Bissau, Mali, Niger, Senegal, and Togo; 2) countriesbelonging to Easter Caribbean Currency Union (ECCU) consisting of Anguilla, Antigua, and Barbuda, Dominica,Grenada, Montserrat, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines. The questionnaire was sentto, and received from the BCEAO and ECCU. Whenever the issue under discussion related to the number of countries,answer from the BCEAO and the ECCU were counted as one.4Comparative tables, for this and the previous iterations of the GPSS, are available for download at the followinglink: mittances/brief/gpssvi
Finally, caution should be used when comparing the latest results with those of previousiterations of the survey: the number of economies/systems have changed and income andpopulation classifications are expected to continue to change over time. Additionally, perennialchanges in the geographical classification (e.g., European Union member countries), as well asinstitutional and infrastructure developments in this area may complicate or even invalidatecomparison of the current results to those collected during the past rounds of survey.Respondents also vary with each iteration of the survey.vii
I.LEGAL AND REGULATORY FRAMEWORKThe GPSS starts off with the legal basis for payment and securities settlement systems. Aftercovering the main relevant laws, the key legal concepts and how they apply to the variouspayment systems in a country, the analysis turns to selected legal aspects in the provision ofpayment services. This section closes with an analysis of licensing and oversight arrangements.Pieces of legislation that have direct/explicit references to payment and securities settlementsystems. Globally, central bank law is clearly the basic legal reference for payment andsettlement issues, as indicated by 98 percent of all economies participating in the survey. Thismarks a notable increase from 2008, when 88 percent of surveyed countries indicated centralbank law as the most relevant legal support for payment systems. Although a comparable trendcan be observed across regions, the latest data show central bank law as highly relevant in EAP,ECA, SSA and EU regions, and less relevant in MNA and LAC regions. Table I.1 provides insightsinto pieces of legislation with explicit reference to payment systems.Central bank law is universally recognized as the most relevant legal support for paymentsystems, equally among high-income and developing economies. Similarly, close to two-thirds ofhigh-income and developing economies report banking law as being highly relevant. Securitiesmarket laws explicitly refer to payment system issues in 79 percent of high-income countries,compared to 61 percent of developing economies. In contrast, developing economies tend torely more heavily on central bank regulations with power of law (85 percent) as opposed to highincome economies (65 percent).The number of economies with securities markets laws that now include references to paymentand settlement aspects has continued to grow since 2012: 77 percent of all countries in 2015compared to 70 percent in the 2012 survey. The progress is more noticeable from a regionalperspective: compared to the 2012 results, 30 percent more economies in ECA, LAC, and MNAregions consider securities markets laws as relevant for payment systems. Consistent with theresults of previous surveys, the relevance of securities markets laws for payment systems ishigher in larger economies, possibly explained by the presence of deeper securities markets insuch countries.Payment systems laws are a relatively newer phenomenon. Nevertheless, a total of 69 economies(62 percent) indicated that they have one. Payment systems laws are present in 58 percent ofhigh-income and 66 percent of developing economies. Experience has shown that, in economieswith weaker legal infrastructure for financial transactions, enacting a payment systems law canprovide a more straightforward alternative to amending existing laws. This appears to be the casein both upper-middle and low-income countries, with over 70 percent of the surveyed economies1
in these categories responding positively for the existence of a payment system law.5 Paymentsystems laws are more common in ECA, SSA and Euro area regions, and the least relevant in LAC,MNA and SA regions.The latest data also show that e-money laws, another relatively recent legislative phenomenon,have been enacted in almost a half of the surveyed countries. This type of law is more relevantamong high-income economies (56 percent), compared to developing economies (34 percent).None of the MNA economies and only a third of the economies in LAC and SA regions reportedhaving e-money laws (with explicit reference to payment systems).Among the various legislations mentioned in this question, the civil code and/or the commercialcode (37 percent), in addition to consumer protection law (38 percent) and the competition law(31 percent), are not as relevant laws for payment systems as the other aforementioned piecesof legislation. Nevertheless, civil/commercial code as well as consumer protection laws indeveloping economies are twice as likely to contain explicit reference to payment systems assimilar laws in high-income economies. From a regional perspective, these pieces of legislationare mostly likely to contain specific references to payment systems for countries comprising ECA(64 percent, civil/commercial code) and MNA regions (civil/commercial code, and consumerprotection code), and the least likely for countries belonging to the EU (in terms ofcivil/commercial code), LAC (as it pertains to consumer protection law) and SA (17 percent,commercial law) regions.Key payment concepts covered in the legal framework. As shown in Table I.2, at the global level,most countries indicate that their legal framework provides proper coverage of settlementfinality (79 percent), netting (86 percent), and the electronic processing of payments (88percent). These percentages are slightly higher compared to the results from 2012. Figures aresomewhat higher for other concepts such as t
iteration of the World Bank Global Payment Systems Survey is the result of collective efforts of the Payment Systems Development Group (PSDG) of the World ank’s Financial Inclusion, Infrastructure and Access Team of Finance, Competitiveness and Innovation Global Practice. The team was led by Maria Teresa Chimienti, and comprised Karol Karpinski, Goran Amidzic, Oya P. Ardic and Holti Banka .
4 payment options available to sars clients 5 4.1 payment option 1 - using efiling to make your payment 5 4.2 payment option 2 - payment at a sars branch 7 4.3 payment option 3 - using the internet to make electronic payment 9 4.4 payment option 4 - bank payments (at one of the relevant banking institutions) 10 4.5 foreign payments 11
The main features in e-payment protocol are less charges of payment amount and high occurrence of transactions on the e-commerce system. 2.1Secure E-payment Protocol An e-payment process is a sequence of actions that involves a business task. There are mainly two kinds of payment transactions: i) Atomic payment transaction-single payment
6) payment instrument means any personalised device and/or a set of procedures agreed between the payment service user and the payment service provider and used by the payment service user in order to issue a payment order; 7) payment service user means a natural or legal person that uses or was using a payment service in the capacity of a payer
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