Retail Payment Systems
In the OIC Member Countries
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such as public concern about forbidden interest rates, when some forms of credit systems are
introduced.
For retailers, the role of business associations may be important because such bodies
traditionally have been influential in fostering innovations that are generally regarded as
beneficial to the sector. Some of the smallest businesses may need credit to afford the
installation of card readers or for the upgrading of their telephone lines and possibly other
aspects of infrastructure, such as reliable electricity supply. Others may benefit from training
sessions to make the transition easier. Retailers are clearly aware of the network effects that
prevail with any such large system. As with most networks, once a critical mass of users has
been achieved there are numerous forms of pressure, and corresponding incentives, to comply
with and participate in the system. Our recommendation is to ensure that careful public
education and adjustment practices are available for both customers and retailers.
6.2 Systems, Standards, Architecture and Controls
Retail payment systems, as we have seen, are dependent upon the interrelated systems upon
which they sit and particularly upon the qualities of national large volume payment systems.
Where the mainstream banking system is to be used by new digital payment systems, and
where money flow is monitored and controlled by regulated bodies, the architecture and
functionality of the national payment system needs to be appropriately structured. That
structure will need to include interconnection points as well as standard accounting practices,
such as the timing of settlement accounts.
All of the countries being studied have already moved toward real-time gross settlement
(RTGS) systems—although they sometimes use different names—for managing their large-
value payment systems. Given that this is a target of the World Bank, it is a testiment both to
the appropriateness of the Bank’s goals and to the capabilities of the countries under study.
Some of them even have upgraded and added some enhanced functions and technical
capabilities to ensure the robustness of the system. There are, however, certain trade-offs
between lowering the systemic risks and decreasing the costs of recent developments in large-
value payment systems. Best practice seems to include both the use of state of the art clearing
systems and thorough, slow transition phasing.
Most OIC countries utilise automated clearing house (ACH) systems for clearing cheques and
draft payments. In the UAE, they added an image-scanning technology in processing and
clearing cheques, which enables a fully electronic clearing process. This can be considered as