How can instant payment systems drive financial inclusion?

Instant payment systems, which use digital technology to allow real-time payments between customers, merchants and financial service providers, are transforming how individuals access financial services, but how can they best serve financial inclusion?

Recently, representatives from 39 central banks and financial regulatory bodies from the global AFI network gathered in Amman, for a four-day training session organized by AFI and the Central Bank of Jordan, and supported by Jordan Payments and Clearing Company (JoPACC), to explore this challenge.

“Instant payment systems are the cornerstone of the digital transformation of the financial sector, and present an unprecedented opportunity to expand access to credit, savings, and insurance, thereby fostering economic inclusivity and financial integration,” said H.E. Dr Khaldoun Al-Wshah, Deputy Governor of Central Bank of Jordan.  

“Instant payment systems are potentially our most important tool to accelerate financial inclusion,” said JoPACC CEO, Maha Bahou. “Their real value extends far beyond providing access to basic accounts or wallets – the digital liquidity we create as more people are engaged with these systems will deepen the financial ecosystem, create economic growth, and lift people out of poverty.”

“In Ghana, instant payments are now the main tool driving financial inclusion,” said Erica Oteng-Gyasi, Payment Authorisation & Innovations Officer, Bank of Ghana. “You don’t need internet access – with just a phone and USSD people can access micro pensions, micro credits, micro savings, and micro insurance. We are fast closing the financial exclusion gap and bringing everyone onto the platform.”

“In Pakistan, our instant payment system lets small startups and fintechs connect with our ecosystem. They can then promote financial inclusion through their products,” said Muhammad Hassan Memon, Assistant Director, Digital Innovations & Settlements, State Bank of Pakistan. “The IPS also enables the way for open banking.”

The potential for instant payment systems to streamline and reduce costs for remittances was highlighted by multiple AFI members. “Remittances represent one of the most important use cases for IPS,” said Mohamed Abdelrahman, Head of Payment Instruments and Acceptance Channels, Central Bank of Egypt. “Central banks now need to think about how to connect their instant payment networks with other countries, either through regional or bilateral integration.”

“Across our network, there’s a consensus that instant payment systems play an essential role in driving financial inclusion,” concluded AFI Policy Manager, Adeyemi Omotoso. “First, as an enabler for financial service providers, banks, non-banks, fintechs, to connect to an ecosystem and work together to drive value and innovation to the market. Second, as a resource for central banks, policymakers and government to demonstrate and build trust for their own ecosystem. And finally, as a way for people to have access to affordable or no-cost financial services.”

“This week we’ve heard examples of forward-thinking innovation emerging from the first iterations of IPS, in areas such as central bank digital currencies, tokenization and cross-border payments.”

“Instant payment systems hold real potential for consumers, providers, policymakers, and more broadly for financial inclusion.”

You can learn more about instant payment systems in a recently published AFI case study on Transfer365, a retail payment system that has transformed El Salvador’s financial landscape.