25 February 2020
ICC has published a paper on an issue central to the vitality and growth of the digital economy: liberalisation of global markets in electronic payment services (EPS) and the trade commitments necessary to achieve it.
The brief – part of a series by ICC to assist World Trade Organization (WTO) Member States in their plurilateral negotiations in Geneva on the trade-related aspects of e-commerce – is the product of extensive consultation with businesses across a range of sectors participating in or affected by the digital economy. The negotiations, now involving 83 Member States, seek to achieve a high standard outcome that builds on existing WTO agreements and frameworks.
Payments services are critical drivers of financial inclusion. In developing countries, they are often the first point of entry for consumers into formal financial services. Globally competitive EPS technology provides individuals, especially those in lower-income and remote segments of society, with easier, cheaper, and safer access to financial services.
The ICC brief outlines the need for negotiators to commit to revise their schedules under the General Agreement on Trade in Services (GATS) to provide unconditional commitments on market access and national treatment with respect to EPS.
Unfortunately, a range of trade barriers exist that stifle the international market in EPS. These barriers include foreign equity caps, burdensome licensing requirements and domestic processing requirements that constrain market access. Barriers also undermine national treatment of foreign service providers, including requirements to process through local competitors such as state-owned enterprises, store data locally, co-brand services with domestic players and meet burdensome technical standards that privilege domestic players.
Commenting on the essential nature of EPS to growth in the digital economy, ICC Secretary-General John W.H. Denton AO said:
“We know that access to payments services enables consumers in emerging markets to develop the financial history necessary to enter the formal economy and take full advantage of other financial services, from credit to insurance.”
Noting in particular the relevance of EPS to micro-, small- and medium-sized enterprises (MSMEs), Mr Denton added:
“The potential to open up the use of digital payments to MSMEs is immense. Digital payments enable MSMEs to sell into global markets in a secure and efficient way, and greater market access of payments providers can be a key driver of MSME growth.”