Expanding Access to Payments: Domestic and Cross-Border Challenges and Opportunities

The U.S. payments system is characterized by strengths that its peers lack, helping the status quo in U.S. payments to persist. These strengths include the ability to process a high volume of payments and do so securely and safely. However, access to the system for individuals is largely determined by possession of a bank account. The status of the small portion of the U.S. population who are unbanked is unlikely to change. Therefore, a wise strategy for the U.S. Department of the Treasury is to embrace an incrementalist approach, selectively pursuing reforms to the U.S. payments infrastructure that improve financial inclusion without compromising the system’s strengths. This SIPA capstone project aimed to analyze options for expanding access to payments domestically and those cross-border. Drawing on comprehensive desk research and interviews with experts in various fields, the team explored policy avenues that hold the potential to address these challenges, encompassing instant payments, electronic money, tokenized deposits, and stablecoins, CBDCs, and ongoing initiatives on cross-border payments. 

Based on the team’s assessment, final policy recommendations include a partnership between mobile carriers and Electronic Money Institutions (EMIs), enhancement of the scalability and competitiveness of FedNow, engagement in international initiatives for the interconnection of instant payment systems, stimulating private sector innovations in blockchain-based transactions, and promoting innovation in non-bank remittance systems. The SIPA team concluded the project by proposing the National Strategy for the U.S. Payment System, setting a visionary course towards achieving a seamless financial ecosystem by 2040. 

*The views expressed through this project are solely those of the SIPA team and do not necessarily reflect the views of the U.S. Department of the Treasury, any of its affiliates, those interviewed for this project, or the faculty advisor.