Payment infrastructures refer to the systems and networks that are used to process and settle financial transactions. These infrastructures can be divided into two main categories: retail payment systems and wholesale payment systems.
Retail payment systems are used for transactions between individuals and businesses, and they include a variety of methods such as cash, checks, credit cards, and electronic funds transfers. These systems are typically operated by banks and other financial institutions, and they are regulated by national and international authorities.
Wholesale payment systems, on the other hand, are used for transactions between financial institutions and are typically used for high-value and time-sensitive transactions. Examples of wholesale payment systems include Fedwire in the United States, Target2 in the European Union, and CHIPS in the United States.
In addition to these traditional payment infrastructures, there has been an emergence of new technologies such as blockchain and digital currencies, which are changing the way payments are processed and settled. These new technologies are designed to be faster, more secure, and more efficient than traditional payment methods and they are increasingly being used for cross-border payments and other financial transactions.
Another payment infrastructure that is becoming popular is the instant payment system, which enables real-time or near-real-time fund transfer between accounts. Instant payment infrastructure is available in many countries, such as the US (RTP), the EU (SCT Inst), and the UK (Faster Payment).
In terms of regions, different countries have different payment infrastructures, some countries like the US and the EU have a well-established and robust payment infrastructure, while some countries like Africa and Asia still have a lot of room for improvement.
Payment infrastructures are the backbone of the global economy, they enable financial transactions to be processed and settled quickly and securely. They are constantly evolving and adapting to new technologies and changing market conditions. The development of these infrastructures is crucial to support the growth of e-commerce, digitalization, and financial inclusion.
