World Bank Report Outlines Electronic Payment Acceptance Shortcomings, Potential

The World Bank has published a digital payment acceptance package meant to serve as a guide for reform work undertaken by the government and other stakeholders to enhance electronic payment acceptance (EPA).  

The World Bank has published a digital payment acceptance package meant to serve as a guide for reform work undertaken by the government and other stakeholders to enhance electronic payment acceptance (EPA).  

The World Bank works extensively to encourage electronic payment acceptance, including running an EPA working group. 

The group looks to foster effective practices for enabling and encouraging the acceptance and use of electronic payments. 

Payment technologies have outstripped adoption to payment acceptance, resulting in the need for work done by the group. 

“In the early stages of its evolution, the electronic payment landscape was dominated by mostly issuer-centric business models that prioritized the issuance of cards over their acceptance by merchants and businesses. Over time, as the usage of cards spread to different parts of the world, the growth of EPA did not keep pace with the number of cards in the market and was often costly, especially for merchants in emerging markets and the micro, small and medium retailers (MSMR) segment.”


Benefits of Electronic Payments 

Studies show that enhancing electronic payments can contribute to GDP growth. A study from 2016 discovered that electronic payments contributed $296 billion in real GDP to 70 countries between 2011-2015. 

The report highlights that using electronic payments promotes transparency, lessens economic informality, and makes it easier to report economic activities with greater accuracy. These advancements can potentially assist economies in luring foreign investment and increase government revenue and creditworthiness.

In addition to macroeconomic virtues, electronic payment acceptance offers various benefits to participants. 

For merchants: increased revenue, increased safety, and lower cash handling costs.

Consumers: Access to other financial services, increased safety, security, and confidentiality, as well as better ability to purchase remotely.

Suppliers: Reduced cost and risk of collections, and better order management.

Providers and operators: increased revenue.

Government: Reduced economic informality, increased transparency, and increased tax revenue.

Despite these advantages, the acceptance of electronic payments has lagged among some economies and merchants.

Another study done by the World Bank estimates that, as of 2015, only 37% of P2B payments at micro, small and medium retailers (MSMRs) globally were made electronically. 

Principles of the EPA package 

·       Increase financial inclusion 

·       Promote the overall use of electronic payments through an appropriate enabling environment. 

·       Maintain a level playing field between various types of payment service providers and payment systems.

·       Maintain technology and product neutrality.

·       Be transparent and fair to all participants in the value chain regarding the economics of acceptance.

·       Recognize and address the effects of two-sided markets (and externalities).

·       Maintain safety, and efficiency as guiding policy objectives 

Package Contents

Electronic Payment Assessment Guide – Comprises tools for stakeholders to identify barriers to EPA considered the most severe in a country.

Incentives Report – Based on a wide range of countries’ experiences, the report analyzes the effectiveness of various incentive types and draws conclusions about the circumstances in which they are likely to have an impact on the adoption and usage of electronic payments.

Innovations Report – Important innovations in EPA technology, business models, and tactics that are enabling the expansion of acceptance services to previously unserved and underserved merchant sectors are discussed in the Innovations Report.

Regulatory Aspects of Intermediaries in Electronic Payment Acceptance: The report examines electronic payment acceptance intermediaries, which play a crucial role in enabling acceptance for small merchants worldwide.

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