Retail Payment Systems
In the OIC Member Countries
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good practice that might be adopted by other countries in order to speed up the clearing
process and prevent cheque fraud.
Innovation in retail payments is important, especially given the volatility and diversity of
systems available. Liberal regimes have so far had good results in stimulating and diffusing
innovation in payment systems, especially among the larger economies such as Indonesia and
Turkey. In some countries foreign workers and expatriates should be considered as actors and
in the UAE and Egypt they have had some influence in bringing innovation to the country.
Most OIC countries remain cash-dominant. However, our study shows the increasing growth of
credit transfers in Turkey, UAE, and Indonesia, among others. Governments can make a
difference by encouraging the use of non-cash instruments and moving towards the cashless
society. Their influence is most direct with regard to governmental services such as taxation,
licensing, penalty payments and for procurement. This can be particularly useful to combat
corruption and money laundering. OIC Member States must also realise their role in combating
money laundering and the financing of terrorism.
6.3 Authorities
All of the large-value payment systems are developed, managed, and controlled by central
banks or, as in Turkey, by an independent supervision and regulatory agency. However, retail
payment systems show some variations. In Indonesia, for instance, MNOs have to comply with
the legal frameworks, laws, and regulations enacted by the central bank if they want to provide
mobile money services. As with other conditions, there is no assurance that one system is
superior to another and bank-led, MNOs-led, or third-party led models are all apparent in the
OIC and each is capable of working. For the BCAO, the Ivory Coast authority has to work for the
whole of the WAEMU countries.
In summary, our recommendations are as follows:
1. Financial inclusion and financial stability are the objective of payment systems. In order to
achieve both objectives, a comprehensive strategy should be adopted to develop sound
retail payment systems.
2. Attention to retail issues by central banks is low and this needs to change. The initiative to
develop access channels to initiate and deliver cashless payments (e.g. POS terminals) has
been quite slow. The existing channels also not fully taken advantage of (e.g. ATMs) and
affect the limited interoperability.