Connecting Digital Economies: Policy Recommendations for Cross-Border Payments
A World Economic Forum report—produced with extensive research contributions from ITIF—analyzes key barriers and challenges to cross-border payments and recommends how to overcome them to support global trade.
The rapid expansion of access to digital payments has made it possible for consumers to conveniently make purchases for goods and services from merchants around the world. The current COVID-19 public health crisis will only accelerate digital trade and cross-border e-commerce as physical commerce contracts and digital commerce expands. However, significant challenges and barriers to digital trade and cross-border payments persist, providing an opportunity for policymakers and regulators worldwide to reduce friction and improve connections between digital economies. This report analyzes these barriers and provides governments with concrete recommendations to promote inclusive growth in the digital economy.
ITIF contributed a chapter on barriers to supplying payment services. The challenge: A growing number of protectionist measures, such as domestic infrastructure requirements, forced data localization, and licensing and equity requirements for foreign firms, prevent international payment service providers from bringing their services to market. Additionally, these measures keep domestic providers from expanding abroad, which is essential for firms that want to bring their services to scale.
Recommendations
- Provide, reinforce, and/or extend “national treatment” for digital payment service providers.
- Support commitments to protect the free flow of data while ensuring regulatory access to data.
- Create a “reference paper” on payment services at the World Trade Organization.
- Explore creating regional payment councils to bring the public and private sectors together.
