A payment system that works for the man on the street

A QUIET revolution in financial services is underway. It is transforming how payment systems in many countries work - with a lot of progress made behind the scenes over the last couple of years.

A payment system is the financial infrastructure enabling money to move between financial institutions in an economy. It is organised around the central bank, which plays the role of clearing house. In the past, you had to be a bank to be licensed to do payments - a quirk from a bygone era when nobody could really imagine anyone other than banks wanting to do payments.

So when non-banks started running payments businesses, they were required by legacy regulations to conduct their transactions through banks. In effect, middlemen were being imposed on newer entrants to the financial system. This was unsatisfactory for a few reasons.