Payment System Regulation for Improving Financial Inclusion

Drawing from existing domestic experiences and the first results of the international debate, this paper tries to identify some high-level recommendations on how the payments system should be regulated to best achieve the particular goal of inclusion. The approach to be taken shall strongly depend on the existing institutional framework of a country and its economic and social context. However, some common trends can be identified. In particular, it emerges that regulation in the field would require a general consideration of relevant issues within the wider context of regulation and oversight of the retail payments system of a country, and that only a safe and efficient national payments system can guarantee effective financial inclusion of a durable nature. In this wider context, the main issue is how specific measures to achieve these several objectives can converge: that is to say, how, when trade-offs are shown between inclusion and the other objectives of soundness, integrity and efficiency, these should be addressed, as well as how, when trade-offs do not specifically emerge, regulation adopted to achieve other objectives can also best address that of inclusion. An adequate combination of general ex ante measures and individual ex post interventions by relevant authorities according to the concrete evolution of the market might ensure such a degree of flexibility to permit that short- or medium-term trade-offs be addressed as to converge towards long-term “sustainable inclusion.”