A new era in fintech payment innovations? A perspective from the institutions and regulation of payment systems

This article analyses the existing institutions and infrastructure for payments. Authoritative settlement based on central bank support is seen as being essential for both large value and retail payment systems; and, in the EU, UK, and US, the importance of regulating for the protection of consumers who use retail payment systems is recognised. In this institutional context, payment innovations (including Bitcoin and distributed ledger or autonomous organisation technologies) are assessed. It is suggested that, while competition at certain levels is likely to bring social benefits through commercial developments, the maintenance of public interest objectives necessarily delineates the scope of competition. While this might limit the disruptive impact of payment innovations, it is argued that, in the light of the public policy needs for a stable and efficient public infrastructure and the social needs of confidence and trust in a predictable and regulated payment system that meets commercial and social expectations such as in consumer protection, this is not necessarily undesirable.