The role of payment systems in reaching the unbanked

Abstract

Reaching the unbanked has quickly become a priority on the agenda of many regulators, policy makers and researchers on an international level. As a result more innovative payment services such as mobile and e-payments have emerged as the solution to breaching the barrier between the formal banking sector and the unbanked. Regulators find themselves in the challenging position of promoting financial access while maintaining a secure, effective and efficient payment system. This paper outlines the main barriers which exclude the unbanked from the banking system as well as the current and potential players, together with their roles in reaching the unbanked. Regulators have to monitor and manage all these players as they become part of the national payment system. This paper gives regulators, particularly in developing economies, insights into current and potential scenarios which they may encounter in aiming to include the unbanked.