Accordingly, the participating banks will be able to effect customer/bank initiated transactions relating to: third party transfers (account-toaccount transfers), bank transfers, bill payments, inward remittances, statutory payments such as taxes, local government rates, inter-bank transactions, direct debits and local credit card transactions. Above all, CPSs, will help reduce bank charges on financial transactions and pass on benefits to customers. Korea and Thailand have facilitated real time settlement of retail payments from person to person (P2P) or business to business (B2B) through CPSs, which is considered to be an affordable and an effective method of facilitating retail payments. 3.6 Ladies and gentlemen, it is for us to convert these challenges to opportunities. I believe that if policy makers, regulators, bankers and service providers work in a coordinated manner with a commitment to improve the retail payments in the region, we will be able to reap the benefits in the near future. I would like to mention a few areas that require urgent attention. 3.7 Improve inter-operability and facilitate supply chain transactions: Many financial products are not linked to financing the supply chain transactions, such as purchases, transportation, marketing of produce of farmers’ small businesses, SMEs and micro enterprises, because many retail payment instruments and mechanisms are not interoperable or flexible enough to facilitate supply chain transactions. Farmers and small businesses use more cash at harvest times and both cash and cheques during post harvest periods.

1.3 In spite of these changes, a notable difference between high value and retail payment systems is that the high value payments have become customer-centric, while the retail payment systems have had limited success in securing customer centricity. Crossborder retail payment systems are also fragmented. Compared to high value payment systems, retail payment development is evolutionary and not revolutionary. 1.4 In general, users expect the payment system to possess three fundamental characteristics. First, it must have integrity, i.e. transactions must be safe, reliable and secure. Second, it must be competitive and efficient, i.e. the cost of making payments should be as low as possible. Third, it must be accessible and inclusive, i.e. available to all and include all. 1.5 As long as people see one or two of the above characteristics and accessibility, in particular, they are comfortable and do not clamour for major changes. This complacent  BIS Review 61/2008  1  attitude is a common challenge in retail payment reforms. People are also not too worried about the systemic risks or payment system crashes and their impacts on the wider financial system. Hence, there is no pressure for change from users although, from the policy makers’ point of view, there are many risks. In this context, while preserving public preference for accessibility, the regulators and policy makers need to provide the policy and regulatory framework, while the private sector should capture critical mass by introducing new payment methods and instruments; promoting widespread access to such instruments; and removing any impediments to accessibility.