Retail Payment Systems
In the OIC Member Countries
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dominate discussion and policy formulation.4 It is also the case that most, but not all, retail
payment systems are dependent upon LVPS. They do so both formally, in that they rely upon
their technologies and associated standards, procedures and institutions, and informally in
that users are commonly encouraged when utilizing retail payment systems by the qualities of
LVPS. Those qualities include technical effectiveness, trustworthiness, access and reliability.
2.1 Defining Retail Payment Systems
Retail payment systems can be defined as mainly consumer payments with relatively low value
and urgency (CPSS, 2009). Retail payments differ from large value payment systems in several
ways: by the character of both payor and payee, by scale, by urgency, and by regulatory
engagement.
Large-value payment systems can be defined as a set of instruments, banking procedures and,
interbank funds transfer systems that ensure the circulation of money (World Bank, 2008).
Retail payment systems have other distinct features that (1) typically relate to the purchase of
goods and services by consumers and businesses, (2) are executed using a greater variety of
payment instruments than large-value payments, and (3) make more extensive use of private
sector systems for transaction processing than do large-value payments for which RTGS
systems are largely used (CPSS, 2012).
Retail payment systems can be classified into the following purposes (FFIEC, 2010):
1. Purchase of goods and services: Consumers can buy goods and services at the point-of-sale
(PoS) (e.g., in person at a merchant location, through the internet, or by telephone) such as
with traditional retailers, and through unattended payment transactions, as with vending
machines.
2. Bill payment: Consumers may choose to pay recurring or nonrecurring bills and invoices
via electronic bill payments. A particular biller’s periodic recurring invoices can be
electronically paid individually or set up to be paid automatically to a payment schedule.
3. P2P payments: The vast majority of consumer-to-consumer payments are conducted with
checks and cash, with some transactions using electronic person-to-person (P2P) payment
systems. The expansion of systems that permit customers to conduct P2P payments is
anticipated through account-to-account (A2A) transfers, which use either the automated
4 In wholesale payments, a focus is in the form of which settlement takes place. In retail payments, a focus is usually in the
consumer adoption and network externalities.