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© 2022 International Monetary Fund
WP/22/228
IMF Working Paper
Monetary and Capital Markets Department
Instant Payments: Regulatory Innovation and Payment Substitution Across Countries Prepared by Tanai Khiaonarong and David Humphrey*
Authorized for distribution by Tommaso Mancini-Griffoli
November 2022
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
ABSTRACT: Instant, or fast, payments are credit transfers completed and settled within seconds or minutes. They have low costs, reduce payment risk, and have significantly replaced the use of cash, cards, or check and direct debit payments. We note the role played by regulators in promoting instant payments and identify instances of significant payment instrument substitution across 12 advanced and emerging market economies. This substitution reflects the realized demand for attributes offered by instant payments. As these attributes are quite similar to those for CBDC, the demand for retail CBDC (if issued) may be less compelling.
| JEL Classification Numbers: | E41, E42, E58, E59 |
| Keywords: | Instant payments, payment substitution, regulatory innovation |
| Author’s E-Mail Address: | tkhiaonarong@imf.org; dhumphrey@cob.fsu.edu |
| JEL Classification Numbers: | E41, E42, E58, E59 |
| Keywords: | Instant payments, payment substitution, regulatory innovation |
| Author’s E-Mail Address: | tkhiaonarong@imf.org; dhumphrey@cob.fsu.edu |
Title Page
WORKING PAPERS
Instant Payments:
Regulatory Innovation and Payment Substitution Across Countries
Prepared by Tanai Khiaonarong and David Humphrey
Contents
1. Introduction
2. Comparing Instant Payments with Other Payment Instruments
3. Regulatory Innovation in Payments
4. Changes in Payment Composition Across Twelve Countries
5. A Measure of Payment Substitution Across Countries
6. Substitution Results
7. Conclusions
Appendix
References
FIGURES
1. Payment Values in Selected Countries
2. Payment Values in Selected Countries (continued)
TABLES
1. Changes in Payment Values and Payment Shares Over Time
2. Statistically Significant Payment Substitution Over 2012–2020
3. Statistically Significant Payment Substitution for Translog Model (2005–2020)
We thank the following central bank officials who have provided assistance in obtaining payment statistics for this study: Ryan Rizaldy and Jacky, Bank Indonesia; Sharon Seah Shing Bey, Bank Negara Malaysia; Othón Martino Moreno González, Bank of Mexico; Orchuma Prachasaisoradej, Bank of Thailand. For comments on the paper, we thank Itai Agur, Parma Bains, Arvinder Bharath, Alexis Boher, Aquiles Farias, Arif Ismail, Minsuk Kim, Harry Leinonen, Marco Pani, Rangachary Ravikumar, Oz Shy, Manmohan Singh, Jeanne Verrier, Hou Wang, and Kjetil Watne. Erica Sandoval and Tatiana Lenshina provided editorial assistance.