Managing Digital Payments Risks: A Regulatory Perspective

by Zilvinas Bareisis, February 7, 2013
Regulation
Global

Abstract

The global regulatory landscape has not kept up to speed with payments innovation. Banks are stewards of the global payments system, but find their incumbent position being challenged by competitors.

In the report Managing Digital Payments Risks: A Regulatory Perspective, Celent discusses critical issues in digital payments risk management and regulation. The report includes:

  1. A proposed payments risks and regulation framework.
  2. A discussion of payments risks and the goals and objectives of payments regulation.
  3. A taxonomy of digital payments from a regulatory perspective to categorize new payment offerings and rapidly determine the most critical risk and regulatory implications.
  4. A set of principles for developing the content of new regulations.
  5. A set of principles for how the regulations should be applied.

“Rapid innovation in digital payments poses new challenges for regulators and those responsible for managing payments risks,” says Zilvinas Bareisis, Senior Analyst with Celent’s Banking Group and author of the report. “While this report does not call for any specific regulations to be introduced in any given country, the proposed framework and principles should be helpful for banks and regulators around the world as they engage in understanding and managing risks in digital payments.”

This 36-page report contains seven figures and six tables.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is part of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America (Boston)
Tylor Tourville
ttourville@celent.com
Tel.: +1 617 424 3284

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)208 870 7875

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81.3.3500.3023

Table of Contents

Executive Summary

1

Introduction

2

Risk Management and Regulatory Framework for Payments

5

Why: Payments Risks and Regulatory Objectives

7

What: Taxonomy of Digital Payments

10

 

Introduction

10

 

Traditional Payment Facilitation

12

 

Nonbank Stored Value Accounts

14

 

Virtual Currencies

16

 

Mobile Billing

17

 

Credit Facilitation

18

 

Summary of Regulatory Gaps

18

How: Key Considerations

20

 

Content

20

 

Applicability

24

 

Regulator and Compliance

26

The Time to Engage with Regulators Is Now

28

Path Forward

30

Leveraging Celent’s Expertise

31

 

Support for Financial Institutions

31

 

Support for Vendors

31

Related Celent Research

32

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