Developing A Futureproof Payments Market Infrastructure

Payments Market Infrastructures (PMIs) are critical to the stability of the global economy, comprising the various systems that enable safe, efficient and open payments.

Yet, the rapid transformation of the payments industry over the past decade has placed PMI operators across the globe at a crossroads as they grapple with the spiralling complexity of maintaining efficient retail payment infrastructure, while ensuring a safe, flexible on-ramp for emerging digital services. The proliferation of instant payments systems, combined with new service layer innovations such as Request to Pay and payments tracking, have put the capabilities (and limitations) of legacy payments infrastructure under the spotlight.

PMI operators must also consider wider technological shifts. New digital payment instruments, including central bank digital currencies (CBDCs) and cryptocurrencies, are emerging. The advent of open banking and application programming interfaces (APIs) are unlocking access and connectivity options, while cloud computing allows on-demand scalability to help rapidly address changing requirements.

More broadly, financial services is increasingly shifting to a ‘marketplace’ model that empowers customers to select the payment methods that suit them. This shift is introducing new participants into the payments value chain and is increasing prominence of technology companies. This has a profound impact on market dynamics and user demand, meaning PMIs must consider how infrastructure fits into the diverse modern payments ecosystem.

In view of these myriad considerations, PMI operators are presented with a fundamental question: How to develop payments infrastructure that is fit for the next 50 years?

To help answer this question, this report analyses the three core policy challenges facing the development of PMIs, namely access, competition and innovation. It will then explore how different PMI operators and regulators across the world have successfully addressed these challenges.