IFC backs $700M digital payments expansion as identity and fraud risks grow

The International Finance Corporation (IFC), part of the World Bank Group, has unveiled a $700 million risk‑sharing initiative to help banks and fintechs in emerging markets scale digital payments.

The program will cover settlement risk giving more institutions the chance to join international payment networks and extend services to small businesses, women entrepreneurs and individuals excluded from formal finance.

IFC estimates the scheme could generate $280 billion in new payment volume, issue 360 million cards and register 90 million users, including 39 million women.

“Scaling up digital payments in emerging markets is one of the most effective ways to create jobs and foster inclusion in the formal economy,” said Makhtar Diop, IFC Managing Director.

The scale of that expansion puts more pressure on the identity, authentication and security infrastructure underneath digital payments. As mobile money and other digital financial services grow, so do risks including identity fraud, SIM swaps and account takeovers. These attacks often target users in developing countries, where mobile money is the first step into the formal financial system.

Digital payments expansion puts identity and security infrastructure under pressure

The International Telecommunication Union (ITU) has been building regulatory capacity around those risks through its Digital Financial Services Security Lab, which helps regulators test mobile payment applications, adopt international security standards and assess vulnerabilities independently.

More than 20 countries across Africa, the Caribbean and Latin America have joined, with regulators now able to conduct independent security testing. ITU says the goal is to ensure payments remain secure and trusted, protecting both money and digital identities.

The ITU’s security recommendations cover several layers of the digital financial services ecosystem. They address vulnerabilities in mobile network signalling through SS7 security measures set out in ITU standard Q.3066. They also tackle SIM‑related risks such as SIM swap fraud and unauthorized access, guided by ITU standard X.1456.

The framework includes an MoU to support coordination between telecom regulators and central banks. It also introduces a consumer competency framework aimed at raising awareness and improving protection for end‑users. Those interested in the DFS Security Lab can find out more and contact the lab here.

Public sector and payments data

Governments are also modernizing disbursement systems. At a Global Government Forum webinar, U.S. state officials and Visa executives demonstrated the shift to digital methods such as ACH transfers, prepaid cards and FedNow.

Payments data creates new identity verification signals, helping detect eligibility fraud and account takeovers. Delaware’s state treasurer Colleen Davis said digital channels provide insights, like identity verification signals, that paper records never could, improving oversight and citizen trust.

Modern payment systems also create new data signals governments can use for identity verification and fraud detection. At a Global Government Forum webinar supported by Visa, Delaware State Treasurer Colleen Davis said digital channels provide data trails that paper systems cannot, including claim patterns, payment timing and identity verification signals.

Visa’s Joe Delaney said the company uses transaction data and analytics to identify anomalies as identity fraud, eligibility fraud and account takeover remain persistent threats across payment networks.

Digitized payments also allow governments to ensure funds are used as intended. Prepaid cards can block spending at casinos or restrict disaster relief money to essential retailers. Delaney said “item‑level adjudication” is in development, which would let governments limit purchases down to individual products.

Davis cautioned that data should not be used to control individuals but to better meet citizens’ needs. Spending patterns can highlight social problems and guide interventions. In Delaware, modernization is already underway with phased upgrades, a new ERP system and laws mandating ACH transfers or prepaid cards for payroll.

Panellists agreed that while fraud cannot be eliminated, modern payments and the data they generate are powerful tools to limit risk, improve oversight and ensure every tax dollar is used effectively.

Challenges remain as millions are unbanked or unwilling to share banking details. Prepaid cards and inclusive identity solutions are needed to ensure access. Legacy systems also slow adoption. Scaling digital payments will increasingly depend on trusted identity, strong authentication, continuous fraud monitoring and secure infrastructure, particularly as governments and financial institutions bring previously excluded users into digital financial systems.

The webinar can be watched here.

Article Topics

digital payments  |  financial inclusion  |  identity verification  |  ITU standards  |  Visa  |  World Bank