Regional payment infrastructure integration: insights for interlinking fast payment systems

Introduction

Over the past two decades, through a combination of digital innovations in payments and evolving end user needs and preferences, the regional integration of payment infrastructures has been expanding. This has enabled cross-border transactions for financial market participants or their customers, often between countries within a region. In some cases, this integration has spread across regions and even globally. Payment infrastructure integration is not only the linking of payment systems from a technical standpoint. It is equally about defining a common operational framework for transacting, clearing and settling cross-border transactions, as well as a robust governance and oversight framework that upholds the high standards of safety and financial integrity. In view of this challenging task, not all payment integration projects have been (or will be) successful.

Several fast payment systems (FPS) that have become operational face some challenges in attracting participants and/or volumes even at a domestic level. Adoption of fast payments tends to be more widespread when the central bank owns the FPS. Publicly owned FPS may be designed to prioritise a public good perspective, aiming for open, inclusive and competitive payment markets. A user-centric approach, addressing diverse needs such as domestic person-to-person (P2P) transactions, merchant payments and cross-border transactions is also important. The inclusion of non-bank providers may improve access for underserved customers. Cross-border functionalities can expand the utility of FPS beyond domestic transactions. Cheap and fast cross-border transactions can also broaden the access of firms to global markets. Keeping these features in mind may help build strong public infrastructures that are widely adopted and support policy goals.

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