Building Resilient Digital Payment Ecosystems for Inclusive Growth
Imagine a world where every government transaction is seamless, transparent, and instantaneous – a world powered by robust digital payment ecosystems.
For governments, embracing digital payments is no longer a choice, but a strategic necessity for a more responsive and inclusive future. From procuring goods and services to distributing social benefits and granting loans to small businesses, digital transactions are rapidly emerging as the foundation of the digital economy.
This strategic shift presents significant opportunities to enhance efficiency, transparency, and financial inclusion, transforming how governments interact with citizens and businesses. Let's examine the six foundational pillars that contribute to a resilient digital payments ecosystem.
The Critical Role of Interoperability
The payments landscape is evolving, moving beyond the familiar account-based era into a new, decoupled world. A future where payments flow seamlessly between different networks, unburdened by the limitations of siloed systems. This is the promise of interoperability, platform-based services, and decentralized technologies.
Cross-border payments, particularly smaller transactions, are a burgeoning frontier, with consumer-to-business payments leading the charge. Flows reached $150 trillion in 2022, generating an even greater increase in cross-border revenues, which rose 17% to $2401 billion that same year. This growth is fueled by the rise of global e-commerce, projected to reach $36 trillion by 20262, and the resurgence of international travel, now nearing pre-pandemic levels.
With payment players prioritizing interoperability and solutions like Visa Direct reaching billions of cards, bank accounts, and digital wallets globally3, a more seamless future-state of global money movement is on the horizon – breaking down barriers and bringing a myriad of benefits to end users.
Meanwhile, embedded finance is weaving financial services into the fabric of everyday life, creating frictionless payment experiences across various consumer journeys. And, behind the scenes, generative AI is quietly transforming the industry, automating tasks, personalizing interactions, and bolstering security against fraud. This convergence of technologies, coupled with robust digital identity strategies and global standards, is paving the way for a truly interconnected payments future.
The goal is clear – seamless and secure cross-platform money movement. Achieving this requires a collaborative approach, where governments establish clear regulations prioritizing citizen protection, data privacy, and consent, while also empowering the private sector. This extends beyond defining appropriate security standards for diverse applications; it is important for fostering innovation in areas like fraud prevention and the development of interoperable payment solutions.
Challenging and fragmented regulatory infrastructure in this new world can have real world impacts. Take policy fragmentation, for example, which is estimated to cost the global economy up to $5.7 trillion4, limiting access and inclusion for both individuals and businesses worldwide. To date there are different data localization measures across 40 countries5 which have a direct impact and hinders fraud prevention efforts given the complexity of the global environment.
However, we are seeing continued global effort bring the various actors together to create a pathway for interoperability and collaboration. Global standard setting bodies such as the Organization for Economic Cooperation and Development (OECD), Bank for International Settlements (BIS), Financial Action Task Force (FATF), and the Financial Stability Board (FSB) are leading the way to pull together relevant stakeholders across private and public sectors, to develop realistic and practically impactful, reflecting both governmental oversight and private sector ingenuity.
Empowering Innovation for Economic Resilience
Governments that proactively foster and champion innovation can significantly enhance the performance and resilience of both the economy and individual sectors. Responsible innovation in payment systems provides the public sector with several powerful tools to achieve these goals. However, it also necessitates a crucial shift: while the private sector has been driving transformative innovation, governments play a pivotal role in creating the regulatory and legislative framework that enables innovation to flourish.
Unique insights derived from payment data can empower both businesses and governments to better target strategies and shape policies for the overall benefit of the economy. For example, Dubai’s ‘Hala China’ initiative leveraged payment data to understand the spending habits and preferences of Chinese visitors. The Dubai Department of Tourism and Commerce Marketing successfully attracted nearly 300,0006 Chinese visitors per quarter before the COVID-19 pandemic, demonstrating the tangible economic impact of data-informed policy and targeted marketing.
For small and medium-sized businesses (SMBs), access to finance is often a critical barrier to growth. Data generated through publicly supported payment infrastructure, particularly from point-of-sale (PoS) terminals, is transforming this landscape. This data empowers fintech companies to build robust credit risk profiles for SMEs – overcoming traditional credit scoring limitations, addressing information asymmetry, reducing transaction costs, and unlocking previously inaccessible funding opportunities to fuel SME growth. The resulting increase in cashless transactions creates a virtuous cycle: higher loan approvals, lower interest rates, and reduced default rates incentivize further digital payment adoption among SMEs, contributing to broader economic development.
Instilling Trust and Cybersecurity
As digitization continues to build momentum and digital payments increasingly become integral to daily life, public trust in government hinges on robust cybersecurity. This trust is a shared responsibility, requiring governments to ensure rigorous data security while empowering citizens with understanding and control.
With cybercrime expected to reach $23.8 trillion by 20277, institutions are moving away from a purely defensive approach to a more strategic one, where risk mitigation is now embedded into long-term planning in order to build resilience8. As more public sector institutions see the benefits of digitizing services, including public procurement, government commercial payments, and public disbursement programs, robust security measures have become critical.
Public-Private Partnerships
Digital transformation thrives on collaboration. Public-private partnerships play a vital role in advancing financial inclusion by combining the innovation and resources of the private sector with the reach and policy frameworks of governments. Expanding access to digital financial services is a key focus, with digitization of government services acting as powerful drivers for inclusion.
Think of it like a jigsaw puzzle, each component fitting into the next, to reveal the bigger picture: policies that nurture digital literacy; the development of robust digital infrastructure; regulations that encourage innovation; and e-procurement processes that open doors for small businesses to compete for public contracts, leveling the playing field against larger corporations.
Data Ethics and Governance
Today the world is generating approximately 463 exabytes of data daily9– a staggering leap from just three exabytes a decade ago. This deluge, particularly payments data with its granular insights into economic behavior, holds immense potential. But this potential comes at a price: the urgent need for responsible data stewardship.
Protecting data isn’t just about compliance; it’s about safeguarding public confidence. Governments grappling with this data explosion must prioritize privacy and security as foundational principles. Robust data governance frameworks are crucial across the public and private sectors, ensuring citizen and consumer rights while unlocking innovation and value for everyone.
Yet, a recent global AI survey reveals a significant gap. A mere 17% of companies have dedicated data governance committees involving risk and legal experts. Even fewer (30%) acknowledge equity and fairness as AI risks10. This lack of preparedness extends beyond AI, highlighting a broader deficit in data ethics.
At Visa, we recognize data as a powerful tool that can fuel innovation and improve customer experience. Visa’s Global Privacy Program11, which is adaptive across a global footprint, ensures that proper safeguards are applied to personal information, from the way it is collected to the way it is used and shared.
As data generation explodes and analytical tools become more sophisticated, ethical dilemmas will only increase. A global push for coordinated, harmonized, and interoperable data governance frameworks holds the solution12. Only then can the power of data be harnessed responsibly and ethically for the benefit of all.
Unlocking Financial Inclusion for Global Prosperity
Financial inclusion is a journey and access to digital payments is the first step. When we empower a person to pay and be paid digitally, we create a pathway to full participation in the formal financial sector. Digital financial access came to the fore during the COVID-19 pandemic. We saw that the governments and societies with more digital access were far more resilient and could move quicker. That’s why Visa is democratizing access to digital payments. A payment credential can be the starting point of a journey that can lead to savings, investment, economic growth, and prosperity over time.
According to the World Bank Global Findex, 71% of adults in developing economies now possess a formal financial account, a substantial increase from 42% a decade ago13. However, significant work remains. Despite these gains, 29% of adults in the developing world still do not have access to the formal financial system, and 43% of adults in these regions continue to rely solely on cash transactions.
In Pakistan, for example, where financial inclusion remains low at 21%, unlocking access to financial services for the unbanked and underbanked, particularly the 2.4 million students pursuing higher education, presents a significant opportunity14. Recognizing the limitations of traditional banking in reaching underserved communities, Visa partnered with Meezan Bank to launch a groundbreaking initiative: Pakistan’s first student debit card. This program provides 18-24-year-old university students with access to secure, convenient, and rewarding digital financial services. By leveraging Visa’s global network and technology, this partnership empowers students with the tools to manage their finances, fostering financial independence and driving economic growth.
Paving the Way Forward
A resilient digital payments ecosystem is not a destination, but a continuous journey of innovation and adaptation. By embracing interoperability, fostering innovation through public-private partnerships, prioritizing cybersecurity and trust, establishing robust data governance standards, and championing financial inclusion, governments can unlock the transformative power of digital payments. This holistic approach not only modernizes governance and drives economic growth but also empowers individuals and businesses to thrive in an increasingly interconnected world.
The future of payments is digital, and together, we can build a future on a foundation of seamless, secure, and inclusive digital transactions.
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1On the cusp of the next payments era: Future opportunities for banks, 2023 McKinsey Global Payments Report, 18 September 2023
2Cross-border payments are an engine for economic growth, World Economic Forum, 7 January 2025
3Cross-border payments are an engine for economic growth, World Economic Forum, 7 January 2025
4How global networks unlock financial opportunity for all, Todd Fox, Head of Global Policy at Visa, 12 January 2025
5The nature, evolution and potential implications of data localisation measures, OECD Trade Policy Paper, November 2023
6The Transformational Power of Digital Payments for Governments, Visa/AT Kearney study
7Shoppers Face A Growing Risk From Cybercrime And Retailers Must Do More, Forbes, 10 October 2024
8Visa CEMEA Security Summit 2024 – Post-event report
9How much data is generated each day? World Economic Forum, 17 April 2019
10Data ethics: What it means and what it takes, McKinsey & Company, 23 September 2022
11Enabling trusted commerce and protecting customers, Visa
12The Powerful Role Payments Data Can Play in the Public Sector, Visa & Kearney research
13https://www.worldbank.org/en/publication/globalfindex
14Visa and Meezan Bank Partner to Increase Financial Inclusion in Pakistan | Meezan Bank
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