How to Implement
Guidance
Empower the Inclusive IPS through supportive regulations.
The regulator licenses bank and non-bank entities acting as DFSPs or various technical service providers, sets financial inclusion goals, supports enabling regulations such as Tiered KYC and regulatory harmonization with countries for cross-border payment facilitation.
Operate the Scheme in national fiat money.
Transactions are in domestic currency. Scheme rules require clearing and settlement in national fiat currency. Fiat currency may need to be converted as part of a cross-border payment.
Incorporate relevant regulation into the Scheme.
The Scheme requires compliance with relevant regulations, which not only apply to DFSP compliance but also may extend to a Platform Operator and to activities of the Scheme itself. The Scheme should share usage and performance reports with the regulator.
Enable regulatory monitoring of transactions.
Where requested by the regulator, the Scheme should make it possible for transactions to be quickly or easily viewed.
Have an appropriate oversight mechanism.
Work with regulator(s) to determine and put in place an appropriate oversight mechanism for cross-border services. Many regional payment Schemes will have this in place, but it will need to be developed in other regions or less formal payment groupings.
Define the bar on consumer protection guidelines.
Regulations provide the context for all aspects of consumer protection and protection of end user data while law enforcement entities ensure that the laws and regulations are followed and that fraudsters face repercussions when end user data is compromised or disclosed.
Why It Matters
This makes the Inclusive IPS more competitive and also builds trust by making digital payments safer and more widely used.
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Fraud Mitigation
Effective fraud mitigation requires an ecosystem approach: where regulations guide DFSP and Scheme actions, while the Scheme rules reinforce those regulations for the DFSP participants. Regulations on consumer protection activities provide a particularly crucial foundation. Complementing regulation with strong supervision of DFSPs’ fraud mitigation activities, contributes to a multi-pronged effort to combat fraud.
Cross-Border
Cross-border payments are, by definition, multi-jurisdictional, requiring authoritative, regulatory clarity on the requirements for 1) any special handling for sending or receiving payment system to process cross-border payments, and 2) the process for sending and receiving cross-border payments between them.
Country variations in regulations can impede cross-border payment and providers’ ability to fulfill diverse requirements and also to communicate them to their end users. Some regional payment arrangements are evaluating how regulation and supervision aspects can be harmonized.
Related Resources
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