community and all service providers to give their inputs for retail payments developments in their own countries, as well as in the region. currently, sri lanka chairs the spc and a secretariat has been set up in colombo to facilitate operational processes. spc has already prepared a road map for the first year and a rolling plan for the medium term. 6. conclusion 6. 1 in concluding, let me re - emphasize that technological advances and changing industry structures are two key forces that impact on payment system developments, of which retail payments is a critical component. however, attention to public priorities, i. e. integrity, accessibility, efficiency and the safety of new retail payment methods, has been low. there is, therefore, an urgent need for coordination between policy makers / regulators and the private sector to ensure that they cater to the general public. 6. 2 there is a clear role for banks, service providers and technical solution providers in the saarc countries to take forward the region ’ s retail payments development. first, we need to understand the environment in which we work by estimating gaps in the systems. the spc has already begun the preliminary work in this regard. banks in the saarc region will have to coordinate with their respective central banks and national payment councils in taking forward the saarc payment initiative. 6. 3 development of the retail payment system is crucial for the development of financial markets in south asia, particularly at a time at which faster growth requires supportive financial services. it is necessary for all stakeholders to be involved in the area of payment system development in preparing a realistic agenda within the national jurisdiction, as well as taking into consideration cross country legislation. in doing so, it is essential to understand the critical issues in the retail payments area and try to minimize the inefficiencies and improve safety issues involved in some of the popular payment modes. 6. 4 the npcs and the regulatory bodies should make all attempts to persuade retail payment service providers to use common national and inter - regional and infrastructure and fostering the standardization and harmonization of retail payment systems. the high cost involved in retail payment systems processes is not necessarily due to the large volumes or the wide array of payment instruments, but due to the use of a large number of proprietary infrastructure systems by service providers and the passing on of these high costs to users. while introducing customer - centric products, it is important to ensure that customers are protected and their rights are preserved. i hope some of the opportunities mentioned above

2007, exports are estimated to have increased at a significant rate followed by higher cross - border payments. prospects and outlook, therefore, for asian region trade, and consequently retail payments, are good. transforming challenges to new opportunities 3. 1 challenges and complexities : retail payments development is very challenging due to numerous complexities and is much more difficult to modernize than large value payments. in order to complete even a small payment, it is necessary to have appropriate and acceptable payment instruments, an institutional set up, an enabling legal environment, infrastructure, processing procedures and money / fund transfer mechanisms. there are enough opportunities to change this situation, if all stakeholders are committed to introducing innovations, with appropriate safeguards. we need to look at some of the practical ways of starting this transformation. 3. 2 discourage cash and paper - based instruments : progress in the use of electronic payments has been slow in our region due to numerous reasons. cash is the most popular mode of face - to - face payments for retail transactions. cash does not require the user to go to specific places, use computers or special equipment to originate or settle a transaction. moreover, the payment is final. given the user preference and convenience, cash and cheques still dominate as payment instruments in many countries. businesses also prefer cheques because of inherited cash management processes, legacy of accounting systems or reluctance by their governments to transact in electronic payment instruments. if there are cheque clearing delays or frequent cheque returns, small businesses have no choice but to borrow for short periods, perhaps at exorbitant interest rates, from informal sources. they also prefer cheques as they can make late payments through post - dated cheques and other deferred instruments. a payment through a cheque is not final and the availability of funds to the payee takes days. cheques carry considerable credit risk and the payment can be assured only with a cheque guarantee scheme. although cheque returns is considered a criminal offence, banks in many countries are reluctant to take appropriate steps to deal with cheque returns, due to fear of recovery of loans and advances from customers. 3. 3 automation of cheque clearing : the cheque clearing process and its modernization have been taking place in many countries. asia, singapore, india and sri lanka have changed their existing laws and introduced cheque imaging and truncation systems, which have changed the whole process of cheque clearing and reduced processing time and transportation costs. the sri lankan experience shows that banks modernized their back