Electronic Cross-border Payments

What are e-payments?

Electronic payments (e-payments) are digital transactions that users make to pay for goods and services on the internet. To execute payments electronically, businesses and individuals use a variety of e-payment methods that range from debit and card payments to bank transfers to mobile pay and automated clearing house (ACH) transactions. E-payments are basically financial operations enabled by electronic devices, such as computers, smartphones, or tablets. For more information on e-payment models and transaction types, see the International Chamber of Commerce’s (ICC) Electronic Payment Services and E-Commerce and the International Monetary Fund’s (IMF) fintech note 19/91 “The Rise of Digital Money.”  

Why do e-payments matter for MSMEs to trade? 

Technological developments in recent years have been enabling financial and non-financial institutions to modernize the payment methods they offer to users. Studies by the Bank for International Settlements (BIS) and the International Monetary Fund have documented the rapid growth that digital technologies are seeing relative to traditional instruments. As digital technologies offer more efficient and less expensive payment instruments, small businesses can benefit from using e-payment options to reduce uncertainty and costs, especially for international trade transactions. Other advantages that e-payments have for MSMEs when it comes to engaging in trade range from speeding up cross-border payment activities at customs to reducing fraud risks and burdensome administrative expenses. For more information on e-payments and online transactions, see the following articles and papers: 

• The BIS article on trends in digital payments, “Payments go (even more) digital”; 
• The IMF working paper WP/21/177 “Is Mobile Money Part of Money? Understanding the Trends and Measurement“;
• The United Nations Economic Commission for Europe’s (UNECE) Trade Facilitation Implementation Guide; and 
• The Organisation for Economic Co-operation and Development’s (OECD) paper on “Trade finance for SMEs in the digital era.”

Which challenges do MSMEs encounter in using e-payments? 

While digital technologies have contributed to the rapid expansion of financial services, e-payment markets face regulatory challenges that hinder the ability of small businesses to have greater access to cross-border payment options for trade. A recent World Trade Organization (WTO) study has shown that only a quarter of WTO Members have fully liberalized cross-border payments under the General Agreement on Trade in Services (GATS) commitments. The World Economic Forum (WEF) and International Chamber of Commerce (ICC) have identified four key areas where policymakers could engage to reduce frictions in e-payment markets: (a) market access and national treatment barriers; (b) technical standards; (c) security and trust; and (d) policy coordination and oversight. For more information, see the WEF’s Connecting Digital Economies page and their white paper on Addressing E-Payment Challenges in Global E-Commerce, as well as the ICC’s Issues Brief on Electronic payment services and e-commerce.

Where can I access resources on frameworks and policy recommendations?

• Policy recommendations for cross-border payments: The WEF outlines key areas where policymakers can engage and cooperate to reduce complexity in e-payments markets. Visit Connecting Digital Economies: Policy Recommendations for Cross-Border Payments.
• Scope of existing commitments on e-payment services: The WEF describes the current state of multilateral commitments and plurilateral negotiations on trade-related aspects of e-payment services and e-commerce. Read the WEF paper.
• Consumer policy guidance on mobile and online payments: The Organisation for Economic Cooperation and Development (OECD) offers guidance that policymakers can use to address consumer protection issues when designing policies targeting mobile and online payment markets. Read the OECD guide.
• Analytical framework on fintech and payments regulations: The International Monetary Fund (IMF) documents recent international experiences in modernizing legal and regulatory frameworks for payments services. Link to IMF framework.

Where can I find best practices and national examples?

• E-payments guide for developing countries: The International Trade Centre (ITC) developed a guide on legal and regulatory reforms and best practices that policymakers can use to address e-payment policy issues in developing countries. Visit the ITC guide.
• Electronic payments acceptance initiatives: The World Bank has documented a review of literature and country examples to guide policymakers in designing incentives to foster electronic payments acceptance. Access the World Bank review.