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Person-to-business instant payments: Could they work in Colombia?
Journal of Payments Strategy & Systems,
15
(4),
376-397
(2021)
Abstract
More than 60 countries have already implemented instant payment systems. However, in many cases they have been limited to person-to-person transactions. This study looks at the challenges that instant payment systems may face in developing economies like Colombia as they advance further into the person-to-business (P2B) transaction space. Using a survey of Colombian merchants, the study explores the factors associated with merchants’ propensity to adopt instant payments and identifies those associated with the adoption of electronic payment alternatives. The study finds that instant payment systems will require a broad strategy if they are to penetrate the P2B space, as they will have to compete with the low marginal costs and immediacy offered by cash and the high levels of informality in the commerce sector, especially for micro businesses. Furthermore, instant payment systems will have to meet merchants’ high expectations with respect to enabling access to other financial services, enhancing competitiveness and increasing their bottom line.
Keywords: instant payments; faster payments; mobile payments; cash and electronic payments; merchants; retail payments; cards; bank transfers
The full article is available to subscribers to the journal.
Author's Biography
Carlos A. Arango-Arango is a principal researcher and adviser in the Payment Systems and Banking Operations Department at the Central Bank of Colombia. His current research focuses on payments economics and financial inclusion. He has published research on industrial organisation, labour and monetary economics and has worked at the Canadian Central Bank and the World Bank. He received his PhD in economics from the University of Illinois at Urbana-Champaign.
Ana Carolina Ramirez-Pineda is an adviser in the Payments Systems and Banking Operations Department at the Central Bank of Colombia. Prior to this, she was the Chief of Economic Affairs at the Colombian Infrastructure Chamber. She is an economist with a graduate degree in government and public policy from Universidad de Los Andes.
Manuela Restrepo-Bernal is a specialised professional in the Payment Systems and Banking Operations Department at the Central Bank of Colombia. Previously, she worked as a macroeconomic analyst at Fedesarrollo. She obtained her master’s degree in economics from Universidad de los Andes.
