National Payment Visions and Strategies

National payment visions and strategies are in vogue and have been for a while. Examples include:

- UK: National Payments Vision - 14 Nov 24, HM Treasury

- Ireland: National Payments Strategy – October 2024, Government of Ireland

- Europe: A European Retail Payments Strategy – 2019, updated Nov 2023, ECB

- India: Payments Vision 2025, June 2022, Reserve Bank of India

- Canada: Modernization Roadmap, 2022, Payments Canada

- Kenya: National Payments Strategy 2022-2025 23 Feb 22, The Central Bank of Kenya

With the global and local payment landscapes changing rapidly due to digital commerce, new technologies such as AI and new forms of money such stablecoins, I expect we will see more countries producing national payments visions and strategies in the coming years, including refreshed ones among those listed above.

This dramatic change in the payments landscape means, in my view, that payment visions and strategies need to be bolder, much bolder than they have been in the past. Radically different levels of ambition, urgency and approach are needed.

With that in mind, I have produced here ideas for a blueprint for a bold national payments strategy for nations to consider, limited here to vision statements and principles.

National Payments Strategy – A Blueprint

Vision Statements

1. A free and competitive market, with a level playing field for payment companies of all types

The market will be supplied by banks and payment companies of all sizes, big technology companies and Fintechs. None will dominate or be given preferential treatment to shape the market to their own needs at the exclusion of others. The government may set the direction for national payments infrastructure but without choosing winners or dictating solutions. The market will be driven by consumer, business and government needs rather than by government or central bank diktat, or by the actions or inactions of dominant banks.

2. A coordinated transition from today’s payment landscape and infrastructure to tomorrow’s

As the new digital payments landscape develops there will be a managed transition from current ways of paying such as by cash, cards and other legacy payment methods to digital. Consumers and businesses will retain choice in how they pay and will have support in making the transition to digital without coercion.

3. New forms of money will coexist with existing forms, driven by consumer and business demand

New forms of money such as stablecoins, d-money (digital e-money), tokenised deposits will coexist with each other and with cash, traditional bank deposits, e-money and central bank reserves.

4. Shared responsibility for fighting fraud

All market participants are responsible for preventing fraud, a mutualised responsibility rather than solely an internal one, with shared data and shared anti-fraud network operations.

5. Light touch regulation

Regulation will be light touch to enable a free market. It will create certainty and be proportionate to avoid creating barriers that benefit large organisations. Regulation will be driven by the market, following actual market experience rather than anticipating perceived harms.

Principles

1. Payment Schemes

- Use formalised payment schemes and rule books to govern new payment methods, operated by independent payment scheme companies

- Develop a separate payment scheme for government payments – e.g. taxes, benefits and keep separate from business and consumer payment schemes

- Design payment schemes to make it easy to pay tax and difficult to avoid paying tax e.g. sales tax

- Enable multi-scheme payments e.g. at point-of-sale, a commercial payment scheme for the payment between buyer and seller and a government payment scheme for a simultaneous automated sales tax payment direct to government

- Plan for payment schemes for payments between devices (IoT) and between software agents (agentic AI), as well as between people and between businesses

- Keep scheme governance separate from infrastructure ownership and operations

- Design payment schemes to allow market participants to charge for their services and get a commercial return through competition

- Avoid regulating prices – however, ban or cap interchange fees where the ultimate payer of such fees has no ability to negotiate or seek alternatives

- Require boards of payment schemes to have skills and experience relevant to the payment scheme, including technology experience relevant to the infrastructure used by the payment scheme.

2. Infrastructure

- Use decentralised infrastructures for clearing payments – no central clearing

- Make clearing infrastructure flexible to cater for all forms of digital money, including commercial bank deposits and e-money, as well as new forms such as stablecoins, tokenised deposits and d-money

- Allow access at any point into a decentralised infrastructure for any participant who wishes to have access

- Enable access to clearing infrastructure through non-bank digital wallets (with no requirement to have a bank account), banking apps and bank APIs

- Design infrastructure to support very high volumes of low value payments, including micropayments, operating in real-time 24/7.

3. Privacy and Identifiers

- Design payment systems to make it impossible to use them as tools for mass surveillance and control of the public (whether by government agencies or corporations)

- Design payment systems to decentralise data and keep it to a minimum to avoid mass or undetected data breaches

- Limit digital id to account authentication, payment authorisation and verification of payee address only – ensure transaction data excludes any digital id data (to guarantee user privacy)

- Implement a common addressing system to make any account, wallet or person reachable and for users to choose their address independent of their provider and to have multiple addresses if they so wish (for example to use with different counterparties)

4. Market Participants and Adoption of New Payment Methods

- Ensure all types of market participants compete on equal terms – banks, Fintechs, big technology companies

- Provide payment choice to consumers and businesses through banks with bank accounts, through wallet providers with digital wallets and through cash

- Plan for the continued use of cash and for a base level of cash usage in the economy, while also enabling the transition from cash to digital payments.

5. Fraud

- design and build fraud prevention from the start into new payments methods, including facilities to share fraud data between market participants and to block fraudulent activities in real-time across payment networks

- Enable two-way sharing of information between market participants and crime agencies, in particular databases for utilising suspicious activity reporting (which is typically a one-way information flow with no feedback to market participants).

In a later post I will outline how some aspects of these principles could be applied in the UK as an example.