Retail Payment Systems
In the OIC Member Countries
13
clearing house (ACH) or automated teller machine (ATM) networks for movement of
funds.
4. A2A payments: With A2A payments, the consumer moves funds from his/her account at a
financial institution to the account of another individual or business at the same or a
different financial institution.
5. Cash withdrawals and advances: Consumers use retail payment instruments to obtain cash
from merchants or automated teller machine (ATMs) (i.e. cash machines). Consumers can
also use personal identification number (PIN)-based debit cards to withdraw cash at an
ATM or receive cash back at some PoS locations.
While large-value payment systems tend to be conservative and more traditional, retail
payment systems continue to evolve with changes in technology and business models. These
developments enable financial institutions to offer new products and services, lower the
barriers to business entry for smaller institutions and exploit economies of scale.
As technology changes, the consumer can exercise many transactions without physical
presence such as via the internet or by telephone or mobile device. Retail payment
instruments have expanded beyond traditional media (i.e., cash, checks, and credit and debit
cards) to prepaid cards, contactless debit and credit cards, and other contactless devices such
as key fobs and mobile phones. In addition, merchants may convert chwques to electronic form
at the point of sale (POS) and use the ACH system for clearing and settlement.
2.2 Actors and Key Players in Retail Payment Systems
Numerous types of institutions create and/or adopt payment innovations. Although it can be
initiated by the private or public sector, the major players that are found most commonly in
OIC countries are as follows:
1. Banks. Due to their unique access to interbank payment systems, banks play a key role in
the provision of retail payment services. While banks do not always develop innovations
in-house, they have a pivotal role in their adoption. Generally, small banks differ from large
banks in the type and timing of payment investments. For the most part, small banks serve
niche customer bases and are not usually innovators in the payments arena, although
there are exceptions. Many small banks provide non-payment-related customised services
to niche customer bases. Small banks are not often the early adopters of new payment
innovations. Instead, they generally choose to buy off-the-shelf products that offer
relatively homogenous products or outsource the processing of these products to third