Instant Payment Systems Driving Financial Inclusion – Ashley Lannquist & Joanna Wisniecka  [Season 3 | Episode #04]

Intro & Outro 00:00:00 Hello. Welcome to P.I.T. Exchange, a podcast by Currency Research. Join us as we discuss the latest in payments innovation and technology with the industry’s most innovative thought leaders. Today’s payments are changing and moving around the world faster than ever before, and Pit Exchange gives you the knowledge and insights to keep up. Sit back and relax as we join currency research, exchanging ideas with today’s special guest.

Shaun Ferrari 00:00:34 Hello everybody! Welcome to the next episode of The Pit Exchange podcast, where we talk about the latest in payments innovation and technology. I’m your host this week, Shaun Ferrari here with Currency Research. And I am thrilled to be joined by not one but two special guests this week. So we have Joanna Wisniecka and Ashley Lannquist from Glenbrook Partners. Welcome to both of you.

Joanna Wisniecka 00:01:02 Thanks, Shaun. Excited to be here.

Shaun Ferrari 00:01:04 Thrilled to have you. It’s, it’s great to chat with you, and everybody’s in for a treat today. We’re going to spend most of the day, talking about some instant payment systems and all things having to do with them.

Shaun Ferrari 00:01:15 But before we get into the details, Joanna, I’m going to turn it over to you and maybe a quick, quick intro yourself about Glenbrook Partners. and we’ll go from there.

Joanna Wisniecka 00:01:26 Sounds great. Thanks. Thanks for that. yeah. Just quickly, going for partners is a it’s an advisory and education firm that’s focused entirely on payments. We live and breathe payments. we work with clients that play different roles in the payments value chain across the globe. So that includes financial institutions, fintechs, payment processors, payment systems, and others. I specifically lead the practice that provides advisory to global central banks, NGOs, foundations. and that is primarily focused on what we’ll be talking about here today. And that’s supporting clients and designing, establishing and scaling instant payment systems, in particular for countries worldwide, primarily developing countries with a focus on on financial inclusion. I have spent most of my career in payments starting at the Federal Reserve Bank in New York. Different aspects of payments, their supervision and policy, financial services.

Joanna Wisniecka 00:02:32 Before making a hop over to Myanmar to move into the financial inclusion space. And I have been with Glenbrook now for for the last four years.

Shaun Ferrari 00:02:43 Nice. Well, thanks for that intro, and I think now is the perfect time to talk about everything going on in instant payments. It’s definitely a a happening area right now, so we can’t wait to to jump into that. Ashley, how about a little bit about yourself and then maybe we can go right from an intro, from about yourself into just a little bit of level setting on, on what is it we’re actually talking about? What are these instant and fast payment systems that are that are out there right now?

Ashley Lannquist 00:03:10 Thanks, Shaun, and nice to speak with you again. We first spoke at your digital currency conferences years ago, I think, in Washington, DC, so it was great to be there along with, I imagine, many of your listeners. so I joined Glenbrook this last year from the International Monetary Fund, where I was doing capacity development on central bank digital currencies, tokenization and novel payment systems.

Ashley Lannquist 00:03:36 Before that, for many years, I was at the World Economic Forum leading their work on CBDC, and I was on the blockchain policy team there, too. So I’ve sort of moved from my career, from blockchain policy and technology to CBDC, working with central banks a lot. And now I’m excited at Glenbrook to work with central banks again, with a focus on inclusive instant payment systems.

Shaun Ferrari 00:04:03 Yeah, I’m going to say you kind of you kind of like moved down that, or up or down or up the stream, from you were at that kind of blockchain side then CBDC more traditional. Now it’s not really trad fi, but more central bank focused and then now kind of instant payments. So you’ve kind of gone back, from the, the crypto side back up to, kind of mainstream mainstream payments with the, with the instant payments anyway. What? Yeah. Take it from there.

Ashley Lannquist 00:04:37 Yeah. And I like working with, with central banks on these topics. So Joanna and I and the team have been working with some African central banks on how to design and develop inclusive fast payment systems, which we’ll talk about, but it’s great to continue that work.

Ashley Lannquist 00:04:52 So what are instant payment systems? IPS, also known as fast payment systems. FF. Many of your listeners will be aware, but to level set, we’re talking about systems that provide the rails or infrastructure for users to be able to transfer their money digitally between transaction accounts, where the funds arrive to the recipient’s account and are final and available for their spending almost instantly after being sent by the sender. So these are typically high volume, low value transactions. Often retail and individual payments are sent. They’re sent to individually rather than batched. Often, the central bank plays a key role as the instant payment system scheme owner or operator, although not always. Some schemes around the world are owned and operated by collections of banks, for instance, or mobile money providers, and these participants can vary from banks only or mobile money providers only, or a mix of the two and a mix of all types of banks and non-bank financial institutions, which would of course, the latter give the most options for for users to be able to to send an instant payment to the widest variety of end recipients.

Ashley Lannquist 00:06:13 These are available 24 over seven, three, 65 and generally very low cost. For for senders, they have a multitude of benefits for the senders and receivers, and some of these benefits are particularly, valuable in emerging market contexts. But they are seen everywhere that IPS are used. So there’s easier cash flow management for households and small businesses because they’re receiving their money and payments immediately, rather than a couple of days later. They can receive faster wage payments from the government. So government to person payments are happening in IPPs, whether it’s healthcare workers or other salaried government workers or recipients of social support from the government. And all of this also supports broader entry of populations into digital digital payments and into the broader formal financial system, rather than cash based payments and informality. I’ll simply I’ll end with this with some simple figures about the general trends of IPPs. So back in 2000, there were no instant payment systems. Now there’s more than 80 and they’re really expanded quite quickly, especially in emerging market regions. So in Africa, there are 25 countries with live IPPs.

Ashley Lannquist 00:07:42 In most Latin American countries, there’s life into payment systems and also in most Asian countries and in the US, of course, we have Zelle and we have fed now and we’ve had for a while. Real time payments RTP. And Europe has has the infrastructure that runs the Sepa instant payments, instant credit transfer scheme. And our work really focuses on developing economies where these IPS are an important foundation towards digital payments and financial inclusion.

Shaun Ferrari 00:08:14 Awesome. No, thank you for that recap. I think folks get a little confused. sometimes on there’s all these different types of what what are seemingly at the user level, right. Kind of instant payment systems out there. Now, you mentioned Zelle. There’s also things like Venmo. There’s also I remember when when fed now first kind of premiered the the industry and the fed had to put out some communications around, this is not a CBDC, right? This is not a, a central bank digital currency. And and folks were like, are you sure? It seems like it could be.

Shaun Ferrari 00:08:50 So there’s there’s always a lot of confusion around when we say instant payment systems, what we’re talking about. So I think that was a good a good kind of summary there for sure. and we’re going to get into a lot and unpack a lot of what you were talking about there as we go through this conversation. because you’re right, they are kind of popping up all over the world. and there’s a lot of questions which we’ll get to you later about, kind of do these things, talk to each other. How does how does, interlinking work and all that sort of stuff. But we’ll get to that. But maybe before we do, again, you mentioned some of the different, different IPS that are, that are out there. So maybe Joanna, to to you. are these are all these systems kind of created equal? Are there some that have different benefits than than others, or how should we think about all the the different systems that are out there.

Joanna Wisniecka 00:09:42 Yeah, that’s a great question.

Joanna Wisniecka 00:09:44 And and you know, Ashley started to kind of highlight some of the the design elements that contribute to some of these systems being more inclusive, perhaps than than others, you know? there are foundational kind of core elements of the systems that actually noted and then real design choices that each individual implementer has to make and how their system will, will function. So a lot of those design choices are out there having the frame of, you know, the goal being inclusion and serving a broad set of the population with different needs, like literacy level needs, you know, barriers in terms of physical access to to branches. And you know, how how you initiate payments, having that frame, you know, really then requires you think about implementers to think about how do you ensure that all end users are served really well, that these systems are affordable? They’re they’re useful, they’re convenient, and they’re safe for all types of end users. So we won’t have time to talk about all the different design choices that contribute to inclusivity.

Joanna Wisniecka 00:10:57 But I do want to highlight a few. And Ashley already started to mention some. You know, one is interoperability. And what we refer to when we think about interoperability is the ability for an end user to send a payment instantly to another end user, regardless of which payment service provider you know either one uses. So in particular, in the developing country context, what’s most important is, you know, most individuals rely on mobile money to to send payments to hold their transaction accounts rather than banks. And so interoperability between banks and non banks is really critical to serving that, that broader set of the population, Usefulness of these payments. So what types of payments does the instant payment system actually enable? And it’s not by default that each IPS supports every use case, right. So it’s a design choice. It’s a very deliberate design choice having all use cases be supported. So you know, personal transfers kind of P2P merchant payments, being able to pay for goods at a merchant, me being able to pay for bills and then receiving payments.

Joanna Wisniecka 00:12:18 You know, Ashley mentioned from the government social disbursement payments, those are particularly important because, government payments often are the trigger for individuals opening transaction accounts. And so it’s kind of a stepping stone towards financial inclusion. However, when you without there being other use cases, supported individuals will just simply withdraw that money. Right. And then pay pay in cash. So the ability to be able to actually use the money in digital form once, and what’s once it’s received in digital form is particularly important. So building that ecosystem that all use cases are supported really contributes to and include an IP as being inclusive affordability. You know, that’s also not a given, right. These are very specific choices that are made all the way, starting with how the IPS implements the technology platform and what technology platform it selects. Is it a lower cost platform? A lower cost platform will enable the IPS to recover the cost of operating and implementing the platform, you know, faster. So there’s that element of kind of a low cost platform implementation in the first place.

Joanna Wisniecka 00:13:35 And so that the cost to participants for using the IPS ends up being lower. Right. The the scheme itself, the operator won’t have to charge as much to the the the payments system. Payments service providers that are participants. And and ultimately of course, the goal is that, you know lower cost to those SPS will mean lower cost to end users. Really that’s that’s the ultimate goal. safety, safety. I’ll just mention that as, as the last one because again, we can we could talk about those for for hours. But safety is another just absolutely critical element and inclusion. you know, when we’re talking about low income individuals, end users, any potential loss of funds is, you know, hugely impactful on their everyday life. And so their ability to trust the the methods that they’re using for processing payments is really important. And there are a number of design choices that are that are supportive there. For example, Use of aliases. Write not having to share an account to send a payment, but for example, a phone number or an email or different IPS or providing kind of their scheme specific types of aliases.

Joanna Wisniecka 00:14:59 But the ability to not have to share an account is an important safety feature, preventing fraud in the first place. So increasingly IPS are including kind of fraud management as part of the services that they provide. So it’s no longer just processing the credits and the debits. It’s also providing additional kind of value add features to help prevent fraud. It doesn’t take the responsibility away from the individual institutions, but it’s an additional, kind of an additional service at the top, at the center. And then when things go wrong, how do you, you know, if if individuals are defrauded and do lose money, how do you ensure that they get those funds back if if indeed it was due to fraudulent transactions? So those are some of the things that the IPS themselves, that the center can help both to guide the participants in the systems and also to provide tools at the center. So those are just four kind of categories. And there there are many more. But those are, you know, particularly important. So, you know, I think of it as a frame of, yes, it’s not just an infrastructure that you’re putting in place.

Joanna Wisniecka 00:16:15 It’s what are the goals that you’re looking to achieve, right, when it comes to inclusivity? so.

Shaun Ferrari 00:16:22 Yeah, no, I mean, there’s so many, so many points there. We could we could kind of jump jump into, last week we, we had a, a reception over in, in London and, Mark Gould had come over from the fed, and he was talking about, you know, fed now and, and some of the progress that that it’s made And he he spent some time on that, that fraud topic, but also on, being able to raise the, the transaction limits, and adjust those going forward. I, I would think, that to, you know, the decisions you mentioned about how you design it and decisions you make in the process, decisions like what’s the size of the transactions that that we can allow and what is that right balance with fraud controls. also lend to to these types of inclusivity. results at the end.

Joanna Wisniecka 00:17:15 Yeah, absolutely. And it’s it’s been an interesting evolution when it comes to those limits.

Joanna Wisniecka 00:17:20 I’m sure you’ve seen in the US those, you know, over time increasing. I think it’s starting there. They’re quite high right now both in RTP and and fed now. which also raises the question, you know, are these still retail payment systems? you know, so these are quite high. there are also considerations from an inclusivity perspective around individual financial institutions, mobile money providers implementing limits within their own right ecosystem and for their particular clients. And there are interesting considerations there around, you know, allowing potentially from a financial inclusion perspective, allowing new end users who maybe have not made payments before to still be able to do so in a safe way by perhaps changing the making the limit on the transactions, you know, lower. So there’s the kind of IPS limit which actually allows for different types of transactions to be made. Like business transactions tend to have higher value. Right. And at the same time, allowing the participants in the systems to manage the risk of individual, individual customers and bring more end users into the system?

Shaun Ferrari 00:18:41 Yeah, no, that makes sense.

Shaun Ferrari 00:18:42 And one other question, based on on some of the things you were talking about as we think about inclusivity and how IP IPS systems, clearly add a lot of different avenues and, and ways to, to get more people, as you describe, kind of into the system. A lot of them are, are still managed by banks or or or do. I guess my question is, do you end users in most cases still have to be banked? or or how do we deal with the inclusivity of getting people into that banking system or to use the system in the first place?

Joanna Wisniecka 00:19:22 Yeah. Critical question. It goes back to that interoperability point. You know, in most in many developing countries, individuals don’t rely on banks and don’t need bank accounts in order to make payments. Right? They rely on mobile money providers. And so a key element of making these IPS inclusive is allowing both banks and those mobile money providers that end users tend to use be part of the same platform, right? Be subject to the same rules, be have the same tools from the IPS available to them so they’re on the same level as the bank.

Joanna Wisniecka 00:20:06 banking institutions that in developing countries, most individuals certainly in low income, rural based, don’t rely on banks. So that that really is almost the starting point, is that accessibility to the payment system by the type of providers that end users use, because even the the unbanked, traditionally unbanked, who don’t have bank accounts will in many cases have mobile money accounts. Of course, we can go all the way down the, you know, the conversation of there are some that don’t even have, you know, mobile money accounts. And then, you know, you’re really talking about how do you, how do you enable some of the basic foundational elements of financial inclusion, such as, you know, having an ID, to be able to even open any sort of account, whether it’s mobile money or otherwise. and that gets to a broader, set of, actions that need to be, you know, put in place by regulators by, you know, telcos, by, yeah, policy makers, others that go way beyond the IPS itself.

Shaun Ferrari 00:21:20 Yeah. Makes sense. It’s everybody, everybody having to to work together to, to solve some of these issues for sure. So if you’re so if you’re a, if you’re, you were a central bank and you’re, you’re thinking about kind of making your system more inclusive. what is some some guidance you think, that they can use or what should they look to to do that.

Joanna Wisniecka 00:21:44 Yeah. Excellent question. And there is guidance out there. there’s actually quite a good amount of guidance, the first one that I’ll point you to, for point your audience to is the Gates Foundation’s level one project. and at Glenbrook has been lucky enough to have contributed to to defining some of that guidance. those resources, they initially came out with those, kind of a set of principles practices for inclusive IPS over ten years ago. Ten years ago now. we recently contributed to revamping, kind of reframing some of those. The essence is the same, but it includes significantly more guidance. Now, that’s really practical. so if, if your audience wants to go to the L1P Dot org website.

Joanna Wisniecka 00:22:36 There is a tremendous amount of content in there. The content is directed at IP’s designers and implementers. There there are specific practices that are speak a bit more to regulators, and ultimately they all have an impact on the payment service providers that participate in the IPS. But it’s a it’s quite a bit of guidance there. You know, another contribution, that that we made to, to the existing guidance recently is to draft a, to develop a women’s inclusion toolkit. and what that, work focused on was answering the question of, are there specific design choices that IPS implementers can make that help address some of the barriers that women in particular face, which there are additional and different barriers that you know are more specific to women. So we looked at the existing principles, practices and guidance with that lens in mind and built and and both developed more how to practical guidance that builds on existing principles and then added some specific guidance that is responsive to the barriers that women face. So this is all the same set of resources, but there is a lens that you can use, the women’s inclusion lens, that helps you kind of narrow in to, okay, I am an IPS implementer, really committed to ensuring that women are included in in digital payments.

Joanna Wisniecka 00:24:20 this this is a resource where you can go to and it includes what we what we affectionately call the Wai paper, which describes why these design choices are really important, how they relate to barriers, as well as an alignment tool, which is a little bit of kind of a sandbox type tool that IPS, implementers, central banks and in many cases can play with to see where they are in terms of their own design choices and what additional design elements they can implement as they evolve their IPS to be more inclusive, ultimately of all. you know, we we found that building these systems with some of the women’s barriers in mind ultimately leads to better design systems for everyone. So, you know, this isn’t about build the system only for women. It is design the system informed by some of those barriers. And guess what? You’re going to build a better system that includes most.

Ashley Lannquist 00:25:22 And I’ll add in.

Shaun Ferrari 00:25:24 Yeah, please.

Ashley Lannquist 00:25:25 I’ll add in another resource, Shaun, that I think it’s worth mentioning. And that’s also very useful for implementers and designers of IPS.

Ashley Lannquist 00:25:38 And it’s from an organization called the Africa Nando Foundation, which is an Africa based, Africa led nonprofit working with central banks and payment system ecosystem stakeholders to accelerate the design and development and launch and improvement of instant payment systems across the African continent. And I believe you’re having their senior leadership come to speak on the podcast shortly, which is great, but they have every year put since 2022, put out an excellent report called The State of Inclusive Instant Payment Systems in Africa. CIPs is the acronym this 2022, 2324 and a newly released 2025 report. They have great case studies about specific countries in Africa, Nigeria, Egypt. Mozambique and others. Kenya to learn from. and they even have a ranking of level of inclusivity. There’s three tiers, ending with mature of of which Nigeria has, has one the, the, the war, so to speak, as the first mature IPS in the continent according to their ranking and a lot of data about use cases, who’s doing GDP, P2P, what major success stories and barriers are and other information that that’s a great resource.

Shaun Ferrari 00:27:06 Awesome. No thanks for that. And I feel like we just threw a lot of different resources and places to go at at people, which is great. And we’ll make sure we do is on the for those of you that accessed this podcast, via our website, the Pit Exchange website, you’ll notice we have write ups about all the websites. We’ll make sure we include some links in there with this episode to to these different resources as well. So, pop over to the Currency Research Pit exchange website if you’d like to see some more of these, or I’m sure they can hop over to the Glenbrook, website as well and get directed to some of these resources or reach out to any of us. But we’ll make sure to to get people to that. And, and also, you mentioned Gates Foundation, African Nanda. both of those will be speaking on some inclusivity topics, coming up at our central Bank payments conference in Istanbul in a couple, a couple of weeks. Sorry, I don’t think you guys are able to join us this year, but in a future year, I’m sure we’ll we’ll get you there, as well.

Shaun Ferrari 00:28:08 But, it should be, should be some good topics discussed. Sorry I had to get a shameless plug in there for for some of the stuff we’re doing as well. you know, Ashley, you talked about some of the things going on in, in Africa and, and what those different countries are looking at. And, and Nigeria, you know, being being highly scored on the list. But what what are you, you know, looking around the the world. what are some, some trends and challenges that you’re seeing out there right now? globally with these systems?

Ashley Lannquist 00:28:39 I think Shaun and I will.

Ashley Lannquist 00:28:41 Highlight this trend of authorized push payment fraud. and unfortunately, IPPs around the world are experiencing this. So senders users are, are authorizing a transaction. So they are themselves confirming and making a transaction. However, the situation is fraudulent or a scam. For instance, the recipient, is impersonating someone that they intend to make a payment to or provides an address, or account information that isn’t the one intended for the sender to receive or to to make the payment to.

Ashley Lannquist 00:29:20 And this is seen across the board, in the US, in the United Kingdom and in developing economies as well. so in light of this, the IPPs scheme, designers and regulators are thinking through what the best practices are and best approaches for managing mitigating the risks and recovering the funds from authorised push payment app fraud. Other payment systems also experience authorised push payment fraud and non authorised. so you know so traditional digital payment systems as well as newer ones. So like in stablecoins and cryptocurrency for instance there’s one on a bit of a side tangent just yesterday Shaun looking into this. But of course there are scam romance scams that, you know that’s authorised push payment fraud. in stablecoins. And, and those systems are also now trying to develop what regulations make sense to manage these. and in the you I’ll go on a little bit of a side tangent here. But in the US, you know the genius act. It doesn’t have any fraud restitution requirements for the end users for authorized or unauthorized payments. Mika, in the EU, the stablecoin regulation does actually have quite a bit of of consumer protections and fraud restitution provisions, although I will say it appears to be mostly for unauthorized, so stolen funds.

Ashley Lannquist 00:30:52 But, like, there’s like within 14 days, a sender has the ability to request a refund. And in most cases they get their, their money back. But similarly in in, in IPS, which again in 2000, these didn’t even exist. We’re seeing the regulars developing the best practices about how to manage this risk. So one way they do this is through something called confirmation or certification of payee copy for short. and this started off as a value add service that some of the financial institutions would provide to their customers when sending an IPS payment. Basically, the sender puts in either the alias or the the name or the account information of the recipient. They intend to make the payment to, and the system will show them whether this is a match to a real name in there that’s connected to the system that has an, that has an account that’s connected to the IPS, or whether it’s somewhat matched to a different type of to a to a different name. Is this or no match? So do you, do you really and they’ll show the name of the recipient.

Ashley Lannquist 00:32:06 So do you. Do you really want to send a payment to this recipient that helps to reduce accidental payments and make sure that the sender is sending to the intended. so that started off as value add from banks. Some banks would charge a fee for it. Now increasingly that is standard And a core part of IPS in the EU’s Sepa. Now since October 2025, it’s mandated and required. It’s also required as part of the UK’s fast payment system and in some other fast payment systems like in Brazil and India. And I believe Thailand. It’s embedded within the process of sending a payment for all users. They get this, this a screen that will show the name of the recipient. So that helps to, to reduce instances of authorized push payment fraud at the start of a payment. And now, after a payment has occurred, there’s an increasing practice around the funds recovery and refunds process for the end users. so the user realizes that they’ve been taken advantage of and sent a payment to an unintended fraudulent recipient.

Ashley Lannquist 00:33:23 So countries are now defining a whole process for this. With with a certain amount of days. So in Brazil, within 80 days someone has the right to flag fraud. Within the UK it’s within 13 months. and then there’s a process that ensues within these instant payment systems where the sender or the receiving financial institution to the transaction has responsibilities. Some of them are required to freeze the funds immediately and then conduct an investigation. Sometimes it’s the sending payment provider or the receiving payment provider that must conduct an investigation. And there’s an information sharing requirement about the transaction details between them. and then if the funds can be recovered, if they’re still in the fraudsters account, that’s great. The receiving institution will, will, will, if required to take those and reimburse them to the, send them over to the to the sender to reimburse them. But if the funds are not available, there are now rules referred to as a fraud liability as to whether or not one of the institutions must make the sender whole. And in the U.K., there’s an interesting case where the scheme rules require that the sending and receiving financial institution, they have a 5050 split in making the sender whole when they’ve lost money to fraud.

Ashley Lannquist 00:34:57 So it’s quite interesting. And all of this is towards the goal of giving senders more confidence and comfort in using these IPS as they notice that, app fraud is happening and they don’t want to fall subject to it.

Shaun Ferrari 00:35:12 It is interesting. I mean, I think, I think you laid out the varied way that different countries and different regulations and different regulators are really thinking about this fraud protection? And who has the responsibility and timelines and all all the sorts of procedures and decisions that that go into it. I think it’s it’s an interesting place for, for central banks and regulators to be, or the designers of these systems, because it’s, it’s not an area where especially if you’re thinking of the, the central bank side, maybe on the soup and red side, they’re, they’re a little more used to it. But from a payment systems operator standpoint, it’s kind of a new ish space for them to be thinking about these types of consumer protections. credit card companies have obviously been doing it for a long time and have systems and procedures and all sorts of things in place to, to handle this.

Shaun Ferrari 00:36:12 but it’s a little different on the depository institution side or the, the payment system operator side. do you see? Do you see folks to to either of you? I mean, you both are talking to a lot of central banks on this. do you see a lot of shared learnings? it’s just it’s just striking, right, that there’s such a diverse. Maybe that’s the where we’re at in the development of any system, right? Different people try different things and people innovate. And, but do you see folks coming together at all or, or discussion around which one of these kind of, fraud prevention schemes seems to be? I don’t know, a gold standard or is it still a lot of trial and error out there?

Joanna Wisniecka 00:37:00 I would say that this is still very much evolving.

Joanna Wisniecka 00:37:03 So so I’m sure there are, you know, platforms for conversation, that bring regulators together right offI I think is kind of a, you know, one that globally brings central banks together. You know, bis others.

Joanna Wisniecka 00:37:17 But I think the key point is that this is very much, very quickly evolving. I think Peixe is the perfect example. the implementation, what they’ve implemented recently, I think end of last year is a continuous continuation of improvements and changes that they started, you know, just over the well, basically since they launched. So they continue to identify, you know, kind of either tools that they’re implementing to help ISPs manage fraud. Now they’re taking additional steps so that they are doing this kind of freezing of funds and putting additional tools in place. And all of that is in reaction to seeing how each one of these works. Right. And so I would expect to continue to see evolution. And I don’t think there is a gold standard currently yet. I would say picks is, a best practice in terms of continued improvement and reaction to what they’re seeing, what’s working and what’s not working. so they’re they’re certainly a standard, in that, but not yet, you know, a single approach that I think, you know, is going to work in every case.

Joanna Wisniecka 00:38:34 So it’s a super fascinating space to watch.

Ashley Lannquist 00:38:39 And the picks case, I think technically is one of the most forward, pushing in terms of fraud funds process and recovery, especially so in a lot of their cases in Brazil. The fraudsters immediately will move the the, the ill begotten funds to other multiple other accounts. And these transactions there 24 over seven. Right. So at 3 a.m. they could receive these funds. And then the funds are gone in the morning when the person goes back to sleep and notices. so they’ve developed a really interesting, system using their directory and a graph technology that traces, the funds through five layers of transactions. and it will detect the probability of the funds in up to these five, five accounts as being originated from the, the fraudulent transaction. And then, they that the central bank can require that those receiving institutions up to five layers, will freeze funds and conduct an investigation. So there’s a lot to learn. And these these countries, as Joanna mentioned, are looking to observe what works, what’s effective in funds recovery, in in providing confidence to users and in preventing authorised push payment and other forms of fraud.

Shaun Ferrari 00:40:02 Nice. Yeah. No, I think that’s that’s super interesting. And I think your point off the top on this one, I think is to be underscored two or, or can’t be forgotten, which is we spend a lot of time talking about fraud in the instant payment systems. That’s not to say at all. They’re more fraudulent than any other payment system that’s out there. There’s fraud in everything. it’s just a matter of this is a newer system. and we need to figure out the best ways to, to see what’s happening and prevent it. But I think I think sometimes everybody gets freaked out and says, oh, my God, there’s all this fraud happening. But that’s not. At least from the data I’ve seen and heard, that’s not actually the case. Yes, there’s fraud, but again, there’s fraud everywhere. and it’s, it’s it’s no more likely to be occurring in instant payment systems than other other systems.

Joanna Wisniecka 00:40:53 That’s that’s spot on, Shaun. I think that’s absolutely right and really critical to raise, you know, these are not inherently, you know, more risky, more prone to fraud.

Joanna Wisniecka 00:41:04 you know, just their design requires, more innovative, new, different ways of thinking about how do you address, how do you prevent fraud and how do you then, you know, resolve it, given that it’s, you know, it’s instant, crediting to the receiver’s account. but absolutely, you’re, you’re you’re spot on.

Shaun Ferrari 00:41:28 Cool. well, I guess we’re running a low on time, but I did want to touch briefly on just one more, aspect of instant payment systems, which is kind of the the cross border piece of this. and, you know, it’s one thing for a country to develop an instant payments scheme and system. and then, of course, there’s all the regulations and rules that we were just talking about around that. But then there’s a whole other layer of, well, how do we make Cros? Can we, first of all, make cross-border payments using instant payment systems? or is it is it one system or is it two systems that talk to each other or they’re interlinked or and I realize this could be an entirely other hour long conversation, but maybe just at the at the high level.

Shaun Ferrari 00:42:16 how do these systems support cross-border payments? And what are we seeing there?

Joanna Wisniecka 00:42:21 Yeah, you’re right, this could be another episode. so, I don’t know, maybe we’re inviting ourselves over for another conversation, but, to let let’s talk about the two kind of, simplified, general approaches that we’re seeing. and we are seeing IPS be increasingly used to support cross-border payments and more thinking being done around what does good design look like. So currently we see, I would say again, simplification, but two ways of IPS enabling cross-border payments. One is interlinking of domestic IPS that are already in place. And that can be done either bilaterally or multilaterally. in Asia in particular, I think we see quite a few bilateral connections, you know, Singapore pay now and Thailand’s prompt pay are probably the ones that have been in place for for the most. Those support P2P and merchant payments. There are quite a few others in Asia that are focused on P to M, so merchant payments using QR codes and all of those are bilateral.

Joanna Wisniecka 00:43:32 next is global payments, which I’m sure you’re aware of. It’s now actually a scheme, a, you know, a committed scheme that’s operated, or at least managed and led currently by, five, I believe, Asian, central banks that have come together. that one’s a little bit more unique because it’s kind of a, a, a software layer, a platform that brings IPS, individual domestic IPS into it. There is a set of rules that don’t override the domestic IPS rules, but that add on top of those specific elements that are most relevant to cross-border payments. So they, the goal kind of the the way Nexus Global Payments is structured and enables multilateral linking. Right. Once you connect to the Nexus platform, technically you can connect to all the other IPS that are connected into it. It’s a it’s a work in progress. And so we’re we’re absolutely paying attention to how that evolves. and then the other so that’s kind of the interlinking component. And, and the other approach is dedicated regional payment systems.

Joanna Wisniecka 00:44:46 Right. So from the start the payment system is enabling or is designed to enable cross-border payments. So some examples of that. Buna in the Arab region, is is focused on supporting payments between the corridors and that region in West Africa. There are a couple of payment systems that are dedicated, cross-border for multiple countries. And you’re upset by it’s not cross currency, but it is cross border. Right? So those are more dedicated cross border payment systems. We’re now seeing even more innovation where those regional payment systems are connecting to domestic IPS. So that’s kind of a third variation there at Buna specifically is connecting to Pakistan’s rust payment system, the domestic payment system, to enable that additional corridor. So different variations and lots of yeah, customization and variation around there. you know, ultimately, what are the goals, right, of these systems are we talked about inclusivity from an inclusivity perspective. You know, the considerations are the same, right. But they are more complicated in a in a cross-border context, I would say in particular, affordability becomes, And a bigger challenge to solve when you’re talking about cross-border payments.

Joanna Wisniecka 00:46:15 the you know, the G20 has been working on a roadmap for improving enhancing cross-border payments and a number of challenges that are there. one of those is is affordability. they published the report end of last year where they specifically said that the efforts to date. So the kind of policy efforts, work streams that we’ve been working on have not yet translated into tangible improvements at the end user level, which, you know, is a is a pretty big, big statement to me, to acknowledging that, you know, we’ve done quite a bit and we’ve looked at a number of potential opportunities to, to increase speed, enhance access, increase affordability. But some of those have not yet had the, you know, the outcomes that they’re looking for. specifically the the cost remains high. So for repentance is on average, the cost is more than 6% and significantly higher in certain corridors, especially when you’re looking at the African continent. so, you know, lots will be paying attention to what happened. We are paying attention to what additional efforts will now be put in place to address, you know, the remaining challenges in particular, affordability.

Joanna Wisniecka 00:47:37 And again, with our hat of looking at all of this from the perspective of the payment systems, are there design choices, again, that the payment systems can make to help contribute to more affordability in cross-border payments? And we think there are there are some examples of that that we’re starting to see the impact of. I think it’s still to be determined. But as an example, the the Buena, payment system has what they call kind of an FX marketplace that they enable. They essentially provide the APIs for FX providers to communicate between each other, and enable more competition for, for better effects rates. we know effects, conversion is a big source of, you know, the additional cost in cross-border payments. So there is a role that the IPS, designers, implementers, you know, policymakers can play and contributing to that affordability, it’s not it’s not going to the IPS won’t solve the problem alone. There are, of course, other elements that go into it, but they can contribute great.

Shaun Ferrari 00:48:50 It is, I think, on the cross-border side, it’s definitely one of those, I think you hit on it at the end where the technology can, can help make this a more affordable, efficient, system.

Shaun Ferrari 00:49:03 But there’s a whole lot of Industry players that need to come along. there’s a whole lot of regulatory alignment that has to come along. There’s the cross-border space is is complicated and gets complicated very fast. if not technically, policy wise and just number of people that need to play together.

Joanna Wisniecka 00:49:25 Yeah, absolutely. And look. Another example of that where policymakers, you know, do play a really critical role. There are many, but one is just transparency in the pricing, right. Ultimately, the end users being able to see and and effectively compare the cost of making a transactions. Right now, there’s a lot of fuzziness and no standardization in how end users see the full cost of a transaction, which is not just the, you know, the fee paid. It’s, FX conversion, which, you know, is often kind of, baked into the numbers and not clearly shown what the effects markups are. And then there are fees taken out along the payments value chain. So opportunities for significantly more transparency to the end user, you know, can can really contribute to the end user.

Joanna Wisniecka 00:50:20 Then making the choice that, oh, I’m able to really compare the full cost of this transaction. And of course I’m going to go with the provider. That is the the least cost. So there you go. You know competition competition at work. But the regulators play an important role in ensuring and advocating for and pushing for more transparency in pricing.

Shaun Ferrari 00:50:44 For sure. That makes sense. Well, amazing. I feel like we’ve covered a lot of ground on instant payment systems today. and I hope it it was as enlightening and as, enthralling the conversation to the listeners as it was to me. I know the time flew by. and, so, Ashley, Johanna, thank you so much for for taking some time and chatting with us. hope hope you enjoyed it as well. So thank you again.

Joanna Wisniecka 00:51:12 Thank you. Thanks very much. We’re always happy to speak with you. Payment systems.

Shaun Ferrari 00:51:17 Awesome. Well with that, thanks everybody for for listening. And we hope you join us on the next episode of The Exchange Podcast, where we’ll have some more special guests talking about the latest in payments innovation and technology.

Shaun Ferrari 00:51:31 Until then, please like, subscribe, download, listen, do whatever it is, wherever it is you do it with your podcasts. and we look forward to talking with you again in a couple of weeks. Thanks much.

Intro & Outro 00:51:46 Thank you for listening to The P.I.T. Exchange, a podcast by Currency Research. Check out our upcoming events and publications at Currency Research. And join us for our next episode to hear what’s trending in payments, innovation and technology.