Championing interoperability for financial inclusion: carrot or stick?
August 5, 2016 Editor 0
Interoperability – a term used in a variety of industries, including telecommunications and financial services – is generally understood to refer to the ability of different systems and sometimes even different products to seamlessly interact. For payment systems, “interoperability” depends not only on the technical ability of two platforms to interact but also the contractual relationships between the entities wanting to interact. Traditionally, interoperability has been established by the same type of institutions, by banks’ participation in a central retail payment infrastructure (e.g. a central switch or an automated clearing house) and adhering to a payment scheme (e.g. a card scheme or a credit transfer scheme).
These days interoperability in retail payments is no longer limited by national borders and the overall ecosystem has become more complex. Non-bank payment service providers have emerged (many of them mobile network operators-MNOs) and there are new types of payment instruments (e.g. mobile money). Innovative payment instruments often start as proprietary solutions, processed in-house rather than via a central platform. In that regard, interoperability can help tear down barriers by enabling transactions between customer accounts of different mobile money solutions. In some countries, interoperability even facilitates transactions across different type of accounts (e.g. deposit transaction accounts held with banks and mobile money accounts held with non-bank service providers).
- Why are payment services essential for financial inclusion?
- Bring in the tech nerds to help expand financial inclusion
- Promoting Financial Inclusion: Is Mobile Money the Magic Bullet?
- Developing a financial inclusion strategy: 5 lessons from Paraguay
- Financial Inclusion Up Close in Rwanda
- New G20 White Paper explores the fast-evolving role of standard-setting bodies for financial inclusion
Categories: World Bank PSD
Subscribe to our stories
- Integrated sheep improvement technologies showcased in Doyogena, Ethiopia March 16, 2017
- Good agriculture practices―low hanging fruits for Zambian farmers March 16, 2017
- Home-grown technology firms help drive eGovernment expansion in East Africa March 16, 2017
- The secret sauce of a ‘start-up nation’ March 16, 2017
- Private sector engagement is key to success on gender equity March 16, 2017