,

1. Post and mobile financial services:
regulatory approaches
~ An introduction to Session 5 ~
Marco Nicolì
Payment Systems and Remittances Specialist
Payment Systems Development Group
UPU Forum on Financial Inclusion
Bern, Switzerland | November, 5 2014

2. Payment Systems Development Group
2
A large
portfolio
• 100+ countries in all
Regions assisted in
various projects of
reform of their national
payments system;
A well-
established
program
• Global products:
standard setting,
GRWG, Remittance
Prices Worldwide,
Greenback, Global
Surveys…
A leading
team
• 40+ specialists in
payment, securities
settlement, and
remittance systems
• 18+ years of activity in
this space
Working with IFAD, UPU, WSBI, UNCDF on the
African Postal Financial Services Initiarive

3. Financial infrastructure: areas of intervention
3
Legal
framework
Retail
and Gvt
Large-
value
Inter-
bank
money
market
Oversight
Securities/
derivatives
clearing/se
ttlement
Cross-
border,
remittances
Credit
reporting
Cooperative
framework
• WB advocates for a
holistic approach to
payment system / credit
reporting reform
• Financial infrastructure as
a composite set of
systems, standards,
rules, instruments,
legal/institutional
framework – not just
technology/infrastructure
Mainly government /
public authority-led
Public-private initiative

4. Classification of non-banks*
4
• Provides services to Payers or Payees in association with / On Behalf of Payment Service
Provider (PSP)
• Examples: Agents, Payment Gateways
Front-End Service Provider
• Provides services to the PSP
• Examples: Operation of IT infrastructure, Customer service Center
Back-End Service Provider
• Operates a payment system for participating payment service provider
• Examples: Operator of Card Switch, ACH, CSD/SSS, CCP
Payment and Settlement System Operator
• Offers services to payers and payees independently
• Examples: Mobile Money, Remittance Service Provider
Independent provision of Payment Service
* Not the only way of classifying non-banks. Similar entities could organize themselves differently in
different situations. There could be overlaps

5. Public policy objectives
for retail payments and remittances
5
Affordability
and ease of
access to
payment
services
Availability of
an efficient
infrastructure
to support
development
of payment
products
Socially
optimal
usage of
payment
instruments

6. Retail payment systems need a holistic
reform approach (WB “retail package”):
 Developing a comprehensive
national retail payments strategy
 A practical guide to retail
payments stocktaking
 From remittances to m-
payments: understanding
‘alternative’ means of payment
within the common framework of
retail payments system
regulation
 World Bank Survey on
Innovative Payment Products
6
Cost matters. Knowledge of cost
structure can result in offering
appropriate incentives to pave the way
for e-payments
World Bank is developing a
methodological framework to measure
social costs of retail payments and
benefits deriving from migration to
electronic payments to allow:
 Consistency of application
 Comparability
 Standardization
 Broad application
A holistic approach to reforming retail payments

7. Leveraging existing infrastructure, promoting competition
7
Leveraging existing
infrastructure and channels
(e.g. cards, ATMs)
 accelerating
development of access
channels to initiate and
deliver cashless
payments (e.g. POS
terminals)
 consolidating /
expanding non-bank
agent networks
 access further affected
by limited
interoperability
Promoting innovation in retail
payments:
 addressing the needs of
the un-banked through
low-cost payment
accounts
 fully realizing
innovations’ potential
through interoperability,
adequate risk
management, and
access to the payments
infrastructure
 improving competition in
the market for payment
services

8. CPSS-WB General Principles for International
Remittances Services
• GP1: The market for remittances should be transparent and have adequate consumer
protection
• GP2: Improvements to payment system infrastructure that have the potential to
increase the efficiency of remittance services should be encouraged
• GP3: Remittance services should be supported by a sound, predictable, non-
discriminatory and proportionate legal and regulatory framework
• GP4: Competitive market conditions, including appropriate access to domestic
payments infrastructures, should be fostered in the remittance service industry
• GP5: Remittance services should be supported by appropriate governance and risk
management practices
Remittance Service
Providers
Public Authorities
Should participate actively in the application of the general
principles
Should evaluate what action to take to achieve the public policy
objectives through implementation of the general principles
8

9. Towards common principles in retail payments
9
Risk-based
assumptions
Abandoning a pure
institutional
approach,
regulation should
be based on kinds
of services
provided and, most
importantly, on the
business scheme
adopted
Commonreference
framework
Provision of
payment
services by
non-banks
should be
considered
under the same
set of general
parameters and
evaluated for
their inclusion
into this
business sector
Empoweringthe
overseer
Adopting a
“functional
approach”
requires a
parallel
empowerment
of one or more
financial
authorities able
to oversee a
more complex
and diverse
market

10. THANKS!
Marco Nicolì
mnicoli1@worldbank.org
remittanceprices.worldbank.org
10