The development and implementation of safe and efficient national payments systems is a crucial component of the World Bank Group’s work to reduce poverty and boost prosperity. Secure, affordable, and accessible payment systems and services promote development, support financial stability, and help expand financial inclusion.
Payment and settlement systems are the mechanisms established to facilitate the clearing and settlement of monetary and other financial transactions. Safe and efficient payment and settlement systems:
- Promote economic and financial-sector development by supporting equitable cost-sharing, the efficient distribution of financial resources, and consumers’ confidence in the use of money.
- Support financial stability by mitigating settlement risk related to financial transactions and facilitating the smooth flow of liquidity.
- Enable access to transaction accounts as a means to safely store value, and make and receive payments, thus helping to fulfill the World Bank Group’s vision of Universal Financial Access (UFA) by 2020.
- Underpin critical reforms in fragile and conflict-affected states, and help deliver cash transfers in the aftermath of natural disasters to facilitate relief efforts.
- Support the digitization of Government payments as part of cross-cutting work in areas like Social Protection, eGovernment and Public Financial Management reforms. The work spans across the revenue collection and expenditure side, including large scale programs like tax collection, public sector salary payments, public procurement and Government to Person (G2P) payments.
The World Bank works to improve the safety and efficiency of payment systems by providing financial and technical assistance and policy advice to client governments. The Bank contributes to international standard-setting, assessment and implementation. The Bank also advances and disseminates payment-system knowledge.
Technical assistance spans the entire breadth of the national payments system, such as the institutional and infrastructure arrangements in a financial system for initiating and transferring monetary claims – from the legal foundations, to payment, securities and derivatives settlement infrastructure, technical standards, market structure and competition, oversight, and cooperation. This includes the adoption of new technologies and new approaches like the rapidly evolving FinTech developments for efficiency and inclusion.
We are currently working in more than 50 countries, through advisory services and lending projects. We conduct diagnostics, design strategies, assist in procuring new systems and upgrading existing systems, advise on the enabling legal and regulatory frameworks, help strengthen oversight and cooperative arrangements, create a conducive environment for adoption of new technologies and approaches without negatively impacting the safety and soundness of the financial system and facilitate regional harmonization.
The World Bank actively participates in several standard-setting initiatives led by the Committee on Payments and Market Infrastructures (CPMI) of the Bank for International Settlements (BIS) and the International Organization of Securities Commissions (IOSCO). The World Bank, together with CPMI, is a standard-setter in the area of international remittances and coordinated a task force that issued guidance on the “Payment Aspects of Financial Inclusion.” The World Bank is the leading implementation agency of international standards through formal assessment – such as the Financial Sector Assessment Program (FSAP) – and technical assistance.
As part of engagements with the standard setters, the team has been engaged in the development of significant update of the international standards for payment and settlement systems based on a comprehensive review of the standards post the 2008 financial crisis. The engagement with the SSBs also includes emerging developments like digital ID, open application program interfaces (APIs), and distributed ledger technologies. The team leverages these engagements with the SSBs to analyze and if appropriate integrate these new developments into the WBG operations.
The World Bank has supported the development and implementation of payment systems reforms in over 120 countries.
These have been instrumental in helping the World Bank client countries to rapidly adopt sophisticated infrastructures and approaches, notable examples being Real Time Gross Settlement (RTGS) Systems; national payments laws; legal and regulatory framework for e-money and mobile money, and agent based models; and national payments system oversight.
- The World Bank helped RTGS technology spread from fewer than 10 countries in the 1990s to more than 120 today. It allows better risk management in interbank settlement and increases resilience to financial shocks, and improving risk settlement time improves efficiency.
- The World Bank has helped shape new approaches to implement retail payment systems like Automated Clearing Houses and has shaped the product offerings in the market to include integrated solutions making it easier for countries with low capacity to rapidly rollout new systems.
- The World Bank’s cutting-edge focus on payment system oversight helped foster a broad scope of the function in the vast majority of central banks across the world.
- The World Bank led global efforts paired with country-level interventions reduced the cost of remittances significantly, contributing to an estimated total saving of $80 billion.
- The World Bank team played a critical role in facilitating the timely and efficient process of cash transfers in emergency and crisis situations in a number of countries, most recently during the Ebola crisis in West Africa.
Who We Work With
In client countries, we work with financial-sector authorities, central banks, supervisory and regulatory authorities, regional development banks, regulatory agencies and donors – such as the Bill & Melinda Gates Foundation, the United Kingdom’s Department for International Development (DFID), and the development agency of Switzerland (SECO).
Globally, we partner with the BIS (particularly the CPMI, and with IOSCO), and the International Telecommunications Union (ITU) to develop global standards and best practices.