Impact Story
How F4D is Revolutionizing Domestic and Cross-Border Digital Payments
What is a fast payment system?
Fast payments are characterized by the instant transmission of the payment message and by the immediate availability of funds to the beneficiary on a 24/7/365 basis. They can bring substantial benefits to the way individuals, businesses, and governments make and receive payments.
Why is it important?
Fast payments can drive financial inclusion, particularly in developing economies, where over 30% of adults lack formal transaction accounts, and over 40% do not engage in digital payments, as per the World Bank's Global Findex Database 2021. Moreover, fast payments can enhance remittances' efficiency, allowing real-time transfers for migrants to support their families and lowering transaction costs, moving closer to the UN SDG target of less than 3%. While the global average remittance cost is 6.25%, the cost of digital remittances stands at 4.72%.
How is F4D Supporting the Agenda?
The World Bank’s Project FASTT (Frictionless Affordable Safe Timely Transactions) drives global fast payment adoption. It entails:
Building capacity in central banks and key institutions;
Raising awareness and advocating for fast payment adoption, with a focus on low-and-middle-income nations;
Convening global stakeholders and international bodies to create a collaborative development agenda;
Providing technical assistance for fast payment system improvements and new implementation;
Generating and disseminating cutting-edge knowledge in fast payment systems.
Global Knowledge
During FY23, the team made significant advancements in data and research, advocacy work, and capacity building. The grant financed publication of new case studies and technical focus notes on topics such as the future of FPS, fraud risks, open banking, and customer authentication 2.0. Through workshops, articles, and media channels, the program is actively disseminating knowledge and experiences, and leading technical discussions as a front-runner in this area. Furthermore, capacity-building events and bilateral workshops were delivered. Details of the global knowledge work is available on the program’s enhanced website.
Country Support
F4D's Umbrella Trust Fund manages direct country initiatives and technical assistance across multiple nations/projects. The active portfolio includes the following countries and regions: Angola, Cabo Verde, Colombia, Iraq, Madagascar, Peru, Uruguay, WAEMU, and Zambia. In the second quarter of FY24, activities in the following countries will enter implementation: Nigeria, Uganda, Africa Wide Regional Payments Platform project, Uzbekistan, Kyrgyzstan, Georgia, and Paraguay.
Angola
Development of an open finance framework which will enable more payment service providers to connect to the fast payment system via the open API - once an API framework has been established - and can help build additional overlay services on the fast payment system to help unlock the full potential of fast payments in the country.
Cabo Verde
Constitution of a National Payments Council with the mandate to facilitate the wider introduction of payment system innovations and notably a fast payment interoperable infrastructure to promote formalization of the economy and transition to more digital payments.
Columbia
Supporting the Central Bank of Colombia in developing a first draft regulation on interoperability of low value fast payments. The team is already working to inform other potential regulatory needs. In coordination with other World Bank units such as Social Protection, G2P Payments, and Consultative Group to Assist the Poor, the team is working on government payment digitization under a broader engagement.
Iraq
Supporting the Central Bank of Iraq in developing and implementing fast payments in the country by ensuring adequate management of the fast payment implementation process. The Central Bank of Iraq and the World Bank team are setting up implementation arrangements for planning, development, and monitoring of the implementation of a fast payment system, and the Bank team is providing advice on critical areas to develop which will inform the implementation plan.
Madagascar
Development of fast payments capabilities in the country along with the uptake in digital transactions and acceptance of electronic payments in the merchants’ ecosystem based on the new national switch funded through a World Bank lending operation.
Nigeria
Development of technical specifications of overlay services on top of the fast payment system in the country such as request-to-pay, and proxy identifiers to increase uptake and enhance customer experience.
Peru
Supporting financial sector authorities to develop reforms enabling fast and interoperable payment services. The key focus of the technical assistance is on providing comprehensive guidance to authorities in the design and implementation of fast payments, on aspects such as policy and governance, operations, functionality, legal/regulatory, risk management, and consumer protection. The team undertook a virtual mission to prepare a background note on current initiatives and market challenges in expanding fast and interoperable payments; this analysis will inform subsequent technical assistance and may be expanded to cover additional topics next calendar year. The team has also provided several rounds of comments and technical discussions with authorities on regulatory reforms drafted by Banco Central de Reserva del Perú (e.g. on a new general regulation for payment service providers) and has delivered three capacity-building sessions to financial sector authorities on underlying technologies for open finance, jointly with the World Bank’s Innovation Lab.
Uruguay
Supporting the Central Bank of Uruguay in the development and implementation of a fast payment system, incorporating a variety of use cases relevant to the country context. So far, the assistance has been focusing on activities related to QR code standards for fast payments, assisting the Central Bank of Uruguay on the regulation regarding interoperability of QR codes for Person-to-Merchant fast payments and delivering a workshop to their staff on the use of QR codes for fast payments, based also on international experience and best practices.
Waemu (West African Economic and Monetary Union) Region
Supporting fast payments and interoperability through a series of workshops to conceptualize the WAEMU approach to fast payments, as well as regulatory reforms on payment systems for a coordinated and comprehensive approach to payment systems and services, including innovative payment services provided by fintech.
Zambia
Providing technical assistance to the Bank of Zambia in the implementation of a fast payment system, which will enable innovation in DFS and further integrate retail payments.