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January 18th, 2023

The Impact Of Regulation On The Global Payments Industry

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The companies, processes, and technology that make it easier for buyers and sellers to exchange money are referred to as being part of the global payment industry. It covers everything, from more modern payment options like digital wallets, eCheck, and mobile payments to more conventional ones like cash and checks. The growing need for simple and secure payment solutions is one of the key factors driving the global payments sector. The demand for quick, dependable payment solutions has increased as more and more people rely on online and mobile platforms for financial transactions and shopping. As a result, several payment technologies have been created, including payment gateways, online and mobile payment systems, and virtual currencies.

Payments and innovation are two words that are frequently used in conjunction. Many technology advancements over the past few years have made it possible to introduce new payment methods and cutting-edge ideas that make payments completely smooth.

The way payments are made is changing more and more as a result of technological advancements and rising demand for digital payment solutions. Nowadays, a variety of retail payment services are provided by non-bank institutions. The issue of where to draw the regulatory boundary is brought up by this. Financial authorities must now determine whether their regulatory frameworks adequately reflect the risk profile of various payment systems. This assessment benefits from a thorough awareness of other nations’ regulatory frameworks.

With the introduction of open banking in recent years, regulatory frameworks like the Federal Data Exchange in the US and PSD2 in Europe helped bring about some degree of harmonization. The ensuing data exchange allowed fintech to provide solutions for payments, loans, personal financial planning, and spending management that were previously only available through banks.
An important executive order on consumer access to data was also released by the Biden administration in the middle of 2021. However, the true objective is to provide non-banking companies access to Federal Reserve accounts, which we anticipate will come about as a result of upcoming investigations and demands for meaningful regulation.

Real-time payment systems exist in the US, giving non-banks a portion of the modernization solution they require. The 2019 Singapore Payment Services Act, for example, evaluates whether a corporation provides the same services as a bank to decide how it should be regulated. While in Asia, nations like Singapore have developed regulatory frameworks. The complex and helpful Sahamati architecture, which grants data owners nuanced control over their data and permits second parties to share it only with explicit authorization, was also created in India. Consent is only valid for a certain set of data and for a specific amount of time when used in conjunction with non-banking financial organizations known as Account Aggregators as a data bridge.

All in all, there are many governing regulatory bodies that are operating in the financial payment industry. They have various rules and regulations about the country that they are concerned with. It is important to have such regulations so that the smooth functioning of the payment industry can continue

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