JBS Vol 21. Num 2. 2019 - Developing a Common Platform for the Digital Payment System in the SAARC Region

Digital payments play a critical role in developing an efficient financial system by lowering the cost of payments and increasing privacy, security, and transparency of payments. Given the benefits of digital payments, the Bangladesh Bank has substantially upgraded and digitized its payment and settlement system over the past few years. Despite these developments, most transactions in Bangladesh are still in cash; consequently, there is a significant potential for further digitization of payments in the country. This paper discusses how to develop a common platform, which will strengthen the digital payment system across the South Asian Association for Regional Cooperation (SAARC) region, especially in Bangladesh. The domestic payment infrastructure in most SAARC countries is not standard or interoperable today. There is a lack of uniformity in rules and regulations across the member countries. This paper recommends developing a common platform for cross-border payments. Uniformity of regulations, standardization of payment methods, organizational readiness, selection of common currency, liquidity management, settlement policy, dispute resolution mechanism, and a common Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standard among member countries, are the primary requirements for developing an efficient, cross-border digital payment system in the region.