Retail Payment Systems
In the OIC Member Countries
93
5. ANALYSIS
5.1 Retail Payment Industry
Retail payment systems in the OIC Member States have been in a period of rapid change since
around 2005, during which we cannot expect to find one dominant form or even specific
trends. Two features stand out. The first concerns the modernisation of large value payment
systems and the foundation that can provide for orderly, government-sanctioned modern
retail payment systems. The second concerns what happens once electronic retail payment
systems have been initiated.
As soon as large volume payment systems are modernised, the foundation is available for the
regulated, mainstream banking system to initiate a variety of retail payment systems. There
are countries that have not effectively modernised their large value payment systems and so
have little leeway for innovation or even experimentation with new forms of retail payment.
They risk being circumvented by fringe payment systems that are effectively outside of
governmental controls.
Once electronic retail payment systems are established, so long as there is room for diversity
and competition, a variety of forms are likely to emerge. In countries such as Indonesia the
government can take the lead in systems such as mobile banking because their private market
is restrained from initiating various schemes. In Ivory Coast, however, the government has
implicitly recognised that they are unable to take the lead with payment systems innovations
and are willing to allow companies such as Fundamo to work in conjunction with foreign
banks and telecoms companies operating within the country.
The move from paper based payment systems is relentless but not deterministic. New
technologies allow for efficient systems to be built around digital exchange mechanisms and
they are readily available and amenable to implementation in many different ways. Given the
pressures to implement such systems quickly and incentives that private sector actors have to
operate retail payment systems, it is not surprising that the majority of OIC governments have
allowed for foreign credit card companies, mobile telecommunications network operators,
banks and specialist companies such as Fundamo to operate either independently or in
partnership with local companies, state owned enterprises and government bodies.