Instant and inclusive payment systems (IIPS) have proven to be a critical catalyst of economic development by enhancing citizen participation in development and accelerating the flow of monetary value between trading parties. Armed with appropriate service options IIPS have advanced the attainment of financial inclusion goals for countries that implemented them. IIPS’ in most countries are implemented as government initiatives without any desire to recoup any favourable return on the investment that would support the sustainability of the initiative; driven by the desire to grow citizen participation in eco-payment systems and ensuring citizens get near real-time value for their traded goods and services. Most IIPS implementations do not consider the full implications and the requirements to keep the implementation alive.
IIPS implementations need to consider adopting governance and management schemes based on international best practice to ensure their sustainability. The IIPS implementation should take a business perspective that will allow for the balance of various stakeholder needs including financial considerations both in the short and long term. Most implementations proceed with governments providing the initial capital outlay to fund the project, scheme fees are normally priced at their lowest to ensure maximum participation. Whereas, the low prices have proven to help grow the numbers, low prices that do not take into consideration all costs including the cost of improvement usually result in recapitalisation traps and in some cases the death of the whole endeavour. The payments space is a very dynamic space that is employing advancements in technology to enhance service provision and organisations that are thriving in this space make considerable investments in research and development; the governance of IIPS implementations needs to consider the cost of innovation as they develop pricing models. In cases where an IIPS is implemented in competition with private commercial payments, the IIPS may not compete favourably due to inadequate funding.
The payment space is also highly regulated with numerous compliance requirements including payment security standards, data privacy regulations and fair competition regulations amongst others, this makes the cost of compliance quite high for payment systems providers. Payment security standards require that systems that process, store and transmit information about payment system users to be developed and configured using stringent security controls that ensure the security of the information. Such essential requirements contribute to the high pricing of payment systems and the cost of compliance. Payment system operators get locked up in an unending compliance loop which may result in serious fatigue if not well planned for and managed.
At the core of any instant and inclusive payment system is an information system, or a string of systems, that are put together to ultimately deliver on the needs and expectations of relevant stakeholders. IIPS’ need to be governed and managed in a manner that ensures the desired objectives are met in a sustainable manner. This requires the consideration of applicable factors that affect the system both in the short and the long term. The continued sustainability of IIPS’ and their impact in enhancing financial inclusion is highly dependent on adopted governance and management schemes, schemes that take into full consideration all aspects of implemented information systems.
By Christopher Nanchengwa MBA, C|CISO, CISSP, CRISC, CISA, C|EH
Information Security Manager (Head) at Zambia Electronic Clearing House Limited (ZECHL)
DFI Alumni and Community Member