Volume 16 (2022)

Each volume of Journal of Payments Strategy & Systems consists of four 100-page issues, published both in print and online. Articles scheduled for Volume 16 are available to view on the Forthcoming content page.

The Articles published in Volume 16 include:

Volume 16 Number 1

  • Editorial: 
    Gerard Hartsink, Editor, Journal of Payments Strategy & Systems
  • Practice papers
    Mobile wallet payments in the time of COVID-19: The Indian experience
    Rishi Kumar, Assistant Professor and Vastav Ratra, Student, BITS Pilani, Hyderabad Campus, and Shravanth Mandava, Associate, PricewaterhouseCoopers

    This paper uses an interrupted time-series approach to study the demand for mobile wallet payments in India following the imposition of social distancing measures to contain the spread of COVID-19. The study finds that although the value and volume of mobile wallet payments initially dipped once the restrictions were in place, the rate of increase in both value and volume subsequently rose above pre-pandemic levels. Various factors are likely to have influenced this trend, including inter alia convenience and society’s new-found aversion to transacting in cash.  This paper argues that to continue to benefit from the work carried out by banks and FinTechs to simplify the process of sending and receiving payments, and encourage the sustained use of mobile wallets, policymakers need to provide the right incentives, infrastructure, regulation and strategies.
    Keywords: COVID-19, mobile wallets, India, time series, interrupted time series

  • COVID-19 and point-of-sale payments in Belgium: How the older generation also learned to love contactless
    Ellen Van Droogenbroeck, Guest Professor and Leo Van Hove, Professor of Economics, Vrije Universiteit Brussel

    This paper reports the first publicly available results of Belgium’s newly created Digital Payment Barometer. The results show that, as in other countries, the COVID-19 pandemic triggered a shift towards contactless and, to a lesser extent, mobile payments at the point of sale. Strikingly, however, the biggest jumps in the use of contactless payments are observed in the 65–74 and 75+ age groups. There are also indications that these shifts in behaviour may well outlast the pandemic, as consumer preferences have also changed markedly.
    Keywords: point-of-sale payments, COVID-19, contactless, mobile, Belgium

  • What is money? A lawyer’s perspective on the evolution of the US payment system and dollars in the digital age
    Jess Cheng, Senior Counsel, Board of Governors of the Federal Reserve System and Joseph Torregrossa, Associate General Counsel and Vice President, Federal Reserve Bank of New York

    This paper analyses the current frictions, and opportunities for evolution, in the US dollar payment system, by viewing money through the lens of network effects, interoperability, and their legal underpinnings. It gives a lawyer’s perspective on the workings of the US payment system and lessons from history, including the free banking era. This paper also discusses current developments, such as various central bank digital currency proposals and private sector stablecoin developments, in this context. The goal is to contribute to the discussion around the future of the US payment system, toward greater efficiency that does not risk introducing instability.
    Keywords: US payment system, central bank digital currency (CBDC), Federal Reserve, legal framework, crypto currencies, money, stablecoins

  • Getting the balance right: Crypto, stablecoin and central bank digital currency
    Wilko Bolt, Senior Economist, Vera Lubbersen, Economist and Peter Wierts, Senior Economist, Dutch Central Bank

    The rise of new forms of private money is reviving a long-standing debate on the appropriate balance between private and public interests in money and payments. This paper provides an integrated policy analysis of various digital assets that may function as money, namely, bank deposits, non-backed cryptos, stablecoins and central bank digital currency (CBDC). This paper argues that public and private money need to coexist in order to get the best of both worlds, that is, trust and innovation. Getting the balance right, however, is no easy task. It requires a digital update of public money and the effective regulation of cryptos and stablecoins. This paper argues that convertibility between public and private money should be a leading principle both for the design of CBDC and for the regulation of stablecoins with the potential to be widely adopted as a means of payment.
    Keywords: digital payments, cryptos, stablecoins, CBDC, regulation

  • An introduction to cross-border payments within the COMESA region of Africa
    Andrew M. Wamicwe, Regulatory Director, Mobile Financial Services, Airtel Africa

    Within Africa, cross-border payments are yet to become seamless and efficient, and correspondent banking relationships with multiple intermediaries still dominate the payments arena. The cultural divide between anglophone and francophone countries extends to key differences in legal and regulatory frameworks, governance structures, payment channels and currencies. This paper explores the landscape of cross-border payments and the various associated challenges, emphasising the importance of keeping to a specific journey and focusing on one hurdle at a time. Written against the backdrop of the recently passed Africa Continental Free Trade Area agreement, this paper argues that if Africa is to succeed in its pursuit of an effective cross-border retail payments environment, the various stakeholders involved will have to embrace customer-friendly interfaces, fair pricing, standard operating rules and predictable/reliable payment rails. While it is possible to have differences in infrastructure, as shall be seen in the paper, the adoption of common principles is essential to the development of the sector.
    Keywords: payments, trade, regulatory, channels, correspondent banking

  • Building a global digital identity infrastructure
    Gottfried Leibbrandt, Author and Adviser and Daniel Goldscheider, Chief Executive Officer, yes.com

    This paper lays out the need for an electronic identity infrastructure. After describing the landscape, current alternatives and hurdles to overcome, it proposes a way forward, based on the recently launched Global Assured Identity Network, which leverages existing identity and authentication mechanisms. This network uses an architecture that keeps the customer in full control of their personal data, and is based on OpenID Connect and Financial Grade API. The proposed solution is described in detail, including the way to adoption and the trade-offs and considerations that underpin it.
    Keywords: GAIN, digital identity, digital infrastructure, industry initiative, open standards, OpenID, FAPI

  • Geldmaat: An example of ATM pooling in the Netherlands
    Erik Kwakkel, Chief Executive Officer and Victor de Wolff, Chief Financial Officer, Geldmaat

    Geldmaat was established by ABN AMRO, ING Bank and Rabobank in 2019. After three years of working together, the three banks retired their respective automated teller machines (ATMs) on 1st October, 2021, replacing them with a network of ATMs owned and operated by Geldmaat. By combining forces to create Geldmaat, the banks have ensured that cash will continue to be available and accessible over the coming years. Nevertheless, the future of the cash chain in the Netherlands remains a topic of much discussion. This paper explains the transition process, from the initial steps in the pooling process to the rollout itself, in addition to the services now offered by Geldmaat. It then goes on to discuss the future of the cash infrastructure in the Netherlands.
    Keywords: cash, digitisation, ATM pooling, cash chain

  • Country Report
    Retail payment strategies: The approach in Portugal compared with the European Commission and the Eurosystem
    Rui Pimentel, Head of Unit, Payment Systems Department, Banco de Portugal

    In November 2020, the Portuguese Payment Systems Forum issued the Portuguese Retail Payments Strategy | Horizon 2022. The strategy has been formulated to support the implementation of secure, efficient and innovative payment solutions, while promoting broad accessibility to retail payment services. As this paper will discuss, the strategy envisions 42 initiatives for stakeholders in the payments market. These initiatives fall under four pillars: (1) ensuring consumers are better informed about the payment instruments available to them; (2) fostering the benefits of digital transformation; (3) contributing to a regulatory framework that promotes innovation and efficiency; and (4) driving the adoption of safer payment solutions. This paper describes key initiatives under these pillars, and reports on how the strategy is progressing towards its goals.
    Keywords: payments, strategy, Portugal, Europe, COVID-19, innovation

  • Book review
    Payments and Market Infrastructure Two Decades after the Start of the European Central Bank
    Reviewed by Piet Mallekoote, Independent Consultant