Page 21 - ITU-T Focus Group Digital Financial Services – Interoperability
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ITU-T Focus Group Digital Financial Services
Interoperability
smart chip is among EMVCo’s most important contributions to security in DFS, given its capacity to hold
encrypted data, perform cryptography, and generate a unique code that is assigned to each transaction.
As mentioned earlier, in addition to technical standards, industry arrangements have been developed for
other kind of topics/areas. One example is the GSMA’s Code of Conduct for Mobile Money Providers, which
aims to establish common business principles to support the development of a safe and responsible industry
for digital financial services. As with technical standards, this Code of Conduct was developed at a global
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level for implementation at the national level by mobile money PSPs. Endorsement of the Code of Conduct is
voluntary. GSMA has also collaborated with providers to develop and test principles that set a high standard
to support the sustainable and safe delivery of mobile money. Mobile money PSPs conduct a self-assessment,
with GSMA guidance, to determine compliance level and identify issues to address. Self-assessments are
already underway for 2016-2017. 9
4.5 Regulatory framework to support the vision
The legal and regulatory framework plays a critical role in creating an enabling environment for the development
of efficient, innovative and inclusive payment services. As per the “Payment Aspects of Financial Inclusion”
report of the Committee on Payments and Market Infrastructures (CPMI) and the World Bank Group (2016),
key aspects of the legal and regulatory framework in the context of retail payments and financial inclusion
include: (i) regulatory neutrality and proportionality; (ii) risk management; (iii) protection of deposits and
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e-money customer funds; (iv) financial customer protection; and (v) financial integrity.
However, some countries still lack even more basic legal and regulatory provisions such as those supporting
settlement finality, electronic payments, electronic records and electronic signatures, etc. A failure to establish
and to effectively oversee adherence to such a framework can stifle competition and innovation, threaten
the safety, soundness and efficiency of retail payment services, lead to inadequate protection of customers,
and deter usage.
5 National Payments Council
5.1 The role of a NPC
A collaborative approach to payment system modernization is essential. On one hand, relevant changes in
any area of the payments industry will most likely have an impact on all of its participants. Moreover, as a
network industry, some of the challenges to improve efficiency, safety or security can only be overcome by the
industry as a whole. Another crucial reason for cooperation is that no single individual or entity possesses all
the knowledge needed to address payment system reforms. Indeed, in market environments characterized by
knowledge-intensive and fast-changing processes, as well as by sophisticated products and complex institutions,
communication between stakeholders be them market players, regulators and even legislators is a necessary
multi-way learning opportunity that also fosters improved decision-making through the sharing of knowledge
and experiences.
8 There are eight Code of Conduct Principles aimed at promoting mobile money providers’ adoption of consistent risk mitigation
practices in critical areas of their business. These address: i) protection of customer funds, ii) mitigation of risk of money laun-
dering and the financing of terrorism, iii) reliability and trustworthiness of mobile money, iv) reliability of the channel and service
performance, v) security of the network and channel, and vi) fair treatment of customers, including disclosure regimes, customer
complaint redress procedures, and protection of customer data.
9 Self-assessment modules have been developed. These leverage on internationally recognized technical and regulatory standards
and best practices.
10 The CPMI and the World Bank Group clearly specify that none of these aspects is actually new. What is new is the attempt to
bring it all together in the context of low-value, potentially high-volume retail payment services offered by old and new types of
PSPs through traditional and innovative approaches.
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