World Bank experts discuss new foundational model for digital payments interoperability

Integrating Fast Payment Systems (FPS) with other components of digital public infrastructure (DPI) such as digital ID and interoperable data exchange platforms can streamline the digital financial ecosystem and drive financial inclusion.

This is the kernel of an advocacy made in a blog post by two World Bank experts, Guillermo Galicia Rabadan and Harish Natarajan, both top-level financial sector specialists at the Bank.

They recognize that while FPS inherently enhance digital payments and affordability, linking them up with other DPI holds high potential for economic transformation. The advocacy comes not long after the IMF suggested in a retail payments report that DPI interoperability has the potential to boost digital payments.

To the authors, each of the three major DPI components are powerful alone, but integrating them for service delivery, especially payments, can greatly amplify their impact.

Such integration, they explain, can be seamlessly done through what they describe as “new foundational services and capabilities” which include Payments Identity Credential (PIC) and a Trusted Access and Credentialing Hub (TACH), which can both be leveraged for real-world uses and benefits.

They explain PIC as a portable bundle of verifiable credentials issued by a payment service provider which enables access across platforms and providers, while the TACH is a trusted framework to link FPS and digital ID systems which can ensure real-time transactions between service providers and govern the lifecycle of PICs.

This PIC and TACH system if properly implemented, they say, will transform FPS from fragmented systems into inclusive and resilient digital payment ecosystems that favor scalable innovation. Specifically, they say it can enable faster onboarding with fewer KYC hurdles, secure transactions through identity-linked authentication, streamline unified access through the PIC, enable offline functionalities, and offer targeted public services where social benefits can be delivered as digital credentials, usable even on feature phones.

“Together, PIC and TACH make interoperability practical. They allow for seamless onboarding, secure transactions, and flexible data exchange, while adapting to a variety of country contexts and existing infrastructures,” the experts write.

These benefits appear laudable and can significantly drive financial inclusion and digital economy participation, but making these new foundations work, actually requires work, according to the experts.

Efforts, they say, must therefore be made to put in place the necessary regulatory and governance frameworks that allow for the formal acceptance of PICs and TACH for KYC, authentication and fraud prevention. The mention the need for clear policies on issues around access, pricing and interoperability.

They equally emphasize standardization and a shared governance approach whereby digital ID and FPS operators know exactly their roles. Above all, the specialists underline the need for privacy safeguards that can guarantee strong protections for user consent, data privacy, and cybersecurity.

The experts also note that at a white paper is being developed to outline legal, regulatory, and technical considerations of the proposed foundational system, and that country-level exploratory works are also ongoing.

Article Topics

data exchange platform  |  digital ID  |  digital payments  |  digital public infrastructure  |  financial inclusion  |  interoperability  |  trust framework  |  verifiable credentials  |  World Bank