The second challenge is market fragmentation. Across domestic markets, incumbent banks, technology companies and telco firms – among others – are all vying for a share of the pie, leading to a proliferation of payment service providers. Although a more diversified market can reduce some of the concentration risks that I highlighted earlier, there are trade-offs that need to be managed. In 2018 alone, the UK saw its number of e-money players increased from roughly 400 to 600 companies. A country that has a high number of proprietary networks is likely to face challenges for interoperability across payment providers. This in turn could weaken network effects and economies of scale for domestic payments. Meanwhile, on the ground, merchants may cope by putting up a dizzying array of signs and stickers to indicate the range of accepted payment options. The sheer amount of choice – each with differing benefits and limitations – could be confusing for consumers, and frustrating for merchants especially when it comes to reconciliation. For countries striving to encourage the adoption of e-payments, these issues could be a major stumbling block. Similarly, market fragmentation is a growing challenge at the international level, especially as individual countries and firms embark on their respective initiatives in the payments landscape. This could lead to substantive cross-border differences, such as in the technical standards, business rules and regulatory requirements. While these differences are not insurmountable, overcoming them can entail significant costs – such as when a web of intermediaries is needed to facilitate a cross-border transaction.

Abdul Rasheed Ghaffour: Reimagining the regulatory landscape for payment systems Keynote address by Mr Abdul Rasheed Ghaffour, Deputy Governor of the Central Bank of Malaysia (Bank Negara Malaysia), at the Global Payments Week 2018 &quot;Reimagining the regulatory landscape for payment systems&quot;, Kuala Lumpur, 4 December 2018. * * * Making a payment used to be an ordinary affair. You’d fill up your cart, head on to the cashier, and reach for your wallet. Today, that cart could be a screen, the cashier a machine, and the wallet a phone. In a span of about 10 years, digital innovation has radically transformed payments. Digital technologies now enable payment services to be easily replicated and rapidly scaled, often at a small incremental cost and increasingly by new and non-traditional players. Geographical and time constraints are becoming less relevant when transferring funds especially with the advent of real-time payment services. Mobile money and e-wallets have brought millions more individuals into the financial fold. ‘Super apps’ combined with payments functionalities have created entirely new ecosystems – these enhance user convenience and offer new opportunities for businesses beyond the area of payments. Cash and cards are no longer the only ways to pay – soon, we may no longer even need to present our physical or digital wallet. Last year, a global fast food chain started accepting facial recognition as a mode of authorising payment in China. This is – quite literally – the new face of payments.