Instant Payment Systems (IPS) and Inclusive Instant Payment Systems (Inclusive IPS) both enable digital financial transfers within seconds. However, their purpose and impact differ significantly. As financial inclusion strategies evolve, understanding these differences is crucial. The article “Understanding the Difference Between IPS and Inclusive Instant Payment Systems” (Inclusive IPS) by Mojaloop’s Paula Hunter and published on Finextra, explains the differences and their implications for financial inclusion.
Key Differences
Objective
- IPS: Prioritizes speed and efficiency for individuals and businesses within the formal financial sector.
- Inclusive IPS: Expands beyond speed, aiming to include unbanked populations, women, rural communities, and informal workers.
System Design & Interoperability
- IPS: Operates mainly within traditional banks.
- Inclusive IPS: Connects banks, mobile money operators, SACCOs, and non-bank institutions to reach underserved users.
Regulatory Role
- IPS: Governed by standard banking regulations.
- Inclusive IPS: Requires active central bank and financial regulator involvement to balance private-sector interests with financial inclusion goals.
Consumer Focus & Affordability
- IPS: Serves those already familiar with digital finance.
- Inclusive IPS: Prioritizes accessibility, low-cost transactions, and transaction certainty for new digital users.
Emerging economies are adopting Inclusive IPSs as Digital Public Goods (DPGs)—open-source financial infrastructure that supports affordable, inclusive financial access. These systems help underserved populations, especially women, build financial histories and access credit, savings, and digital payments.