BIS Paper 152: Faster Digital Payments — Global and Regional Perspectives

The Fast Payment Revolution Reshaping Global Finance

The retail payments landscape is undergoing a fundamental transformation. BIS Paper 152, published by the Bank for International Settlements in December 2024, documents how fast payment systems (FPS) have moved from experimental infrastructure to essential financial utilities in countries across Latin America, Asia, and beyond. Edited by José Aurazo, Jon Frost, and Anneke Kosse, this volume brings together research from a landmark workshop on fast payments held in Mexico City in May 2024, co-organized by the BIS and the World Bank.

Fast payments — also referred to as instant, real-time, or immediate payments — allow transaction messages to be transmitted and final funds to become available to the beneficiary in real time or near real time, operating as close to 24 hours a day, 365 days a year as possible. This capability represents a paradigm shift from traditional payment systems that batch-process transactions during business hours with settlement delays of one to three days. The implications extend far beyond convenience: faster payments mean faster commerce, improved cash flow for small businesses, reduced reliance on cash in informal economies, and meaningful progress toward financial inclusion for underserved populations.

The scale of adoption is remarkable. In Brazil, over 90% of the adult population used Pix — the country’s central-bank-owned FPS — between July 2023 and July 2024. Costa Rica’s SINPE Móvil has reached nearly 80% of adults. India’s Unified Payments Interface processes billions of monthly transactions. These are not incremental improvements to existing payment rails; they represent entirely new infrastructure layers that have reshaped how hundreds of millions of people transact daily.

How Fast Payment Systems Work: Architecture and Design

Understanding the architecture behind fast payment systems is essential to grasping why some succeed spectacularly while others struggle to gain traction. BIS Paper 152 uses the term “FPS” as an umbrella encompassing the underlying technical infrastructure, participating payment service providers (PSPs), end-user-facing services, and the rules governing processing and delivery of fast payments. This holistic definition matters because success depends not just on technology but on governance, incentive structures, and ecosystem design.

At the technical level, fast payment systems require real-time gross settlement or near-real-time clearing capabilities, instant notification to both sender and receiver, persistent availability (the 24/7/365 standard), and robust security and fraud prevention mechanisms. Most modern FPS deployments leverage ISO 20022 messaging standards, which provide richer data fields than legacy formats and facilitate interoperability across systems and borders.

A critical design choice identified in the BIS paper involves addressing mechanisms. Alias-based systems — where users register phone numbers, email addresses, or national ID numbers as payment identifiers — dramatically reduce friction compared with traditional bank account number transfers. Quick response (QR) codes add another layer of convenience, enabling merchant payments through simple smartphone camera scans. Brazil’s Pix, for example, supports multiple alias types including CPF (individual tax ID), CNPJ (business tax ID), email, phone number, and random keys, giving users flexibility in how they identify themselves within the system.

The paper also highlights the importance of interoperability by design. Systems that mandate participation by all licensed financial institutions — as Brazil and Mexico have done — achieve faster network effects than voluntary schemes. When every bank and fintech must connect to the FPS, users can send instant payments to anyone, regardless of their financial institution, eliminating the fragmentation that plagues many digital payment ecosystems.

Brazil’s Pix: A Digital Payments Case Study in Rapid Adoption

Perhaps the most compelling chapter in BIS Paper 152 examines Brazil’s Pix, which has become a global benchmark for fast payment system deployment. Launched by the Central Bank of Brazil in November 2020, Pix achieved adoption rates that exceeded even optimistic projections, fundamentally altering Brazil’s payment landscape within its first two years of operation.

The research, conducted by scholars including collaborators from Northwestern University, employs rigorous empirical methods to analyze Pix’s impact on both payment behavior and the broader banking sector. Using municipality-level data from the Central Bank’s Instant Payments System (SPI) combined with information from the Payment Chamber (CIP), the researchers demonstrate that Pix did not merely substitute for existing electronic payment methods — it expanded the overall digital payments ecosystem.

Several design decisions drove Pix’s extraordinary success. First, the Central Bank of Brazil mandated participation for all licensed financial institutions, ensuring universal network coverage from day one. Second, all person-to-person transactions are free of charge, removing cost barriers that had previously kept many Brazilians reliant on cash and boletos (payment vouchers). Third, the system operates 24/7/365, unlike traditional bank wires (TEDs) that were limited to business hours. Fourth, multiple alias options — phone number, email, tax ID, or random key — simplified the user experience dramatically.

The empirical findings reveal that Pix adoption complemented rather than cannibalized other payment methods. Following increased Pix usage, researchers observed systematic growth in the use of credit cards, debit cards, and bank wires. This suggests that familiarity with digital payments through Pix’s accessible interface encouraged broader experimentation with electronic financial services. Perhaps most significantly, Pix adoption correlated with increased bank account openings and more active use of existing accounts — a direct pathway to deeper financial inclusion.

The natural disaster analysis provides particularly compelling evidence. When municipalities experienced flooding events, Pix adoption accelerated as communities needed rapid, frictionless ways to receive and distribute emergency funds. This “complementarity” effect — where payment technology adoption triggers broader digital financial engagement — represents a powerful mechanism for systemic financial inclusion.

Costa Rica’s SINPE Móvil and Central American Payment Innovation

Costa Rica’s SINPE Móvil, implemented in May 2015, represents one of the earliest and most successful FPS deployments in Latin America. BIS Paper 152 dedicates a detailed chapter to this system, authored by Douglas Araujo and Carlos Cantú, examining its architecture, adoption trajectory, and macroeconomic implications for the Costa Rican banking sector.

SINPE Móvil allows instant person-to-person transfers using mobile phone numbers as the primary identifier. The system’s simplicity has been central to its success: users register their phone number with their bank, and then any other SINPE Móvil user can send them funds instantly, free of charge, at any time. By August 2024, nearly 80% of Costa Rica’s adult population was using the system regularly.

The research findings on SINPE Móvil’s impact on the banking sector are nuanced and encouraging. Higher SINPE Móvil usage has correlated with increased financial activity across multiple dimensions, rather than simply shifting existing transaction volumes from one channel to another. The system has served as an on-ramp to broader digital financial services, particularly for populations that previously conducted most transactions in cash.

Costa Rica’s experience also highlights important lessons about the role of central bank governance in FPS deployment. The Central Bank of Costa Rica’s decision to own and operate the infrastructure, set transparent rules for participation, and maintain zero-fee policies for individuals created the conditions for rapid network growth. These design principles — central bank ownership, mandatory participation, and consumer-friendly pricing — appear consistently across the most successful FPS deployments documented in the BIS paper.

Beyond domestic success, Costa Rica’s involvement in the Transfer365 CA-RD initiative demonstrates regional ambitions for cross-border instant payments. This system for instant cross-border payments among Central American and Dominican Republic countries represents a pioneering effort to extend the benefits of fast payments beyond national borders, addressing a critical gap in the region’s financial infrastructure.

India’s UPI: Organizing Digital Payments at Scale

The chapter on India’s Unified Payments Interface (UPI) by Nikhil Agarwal, Prasanna Sinha, and Robert Townsend offers a distinctive analytical framework for understanding how digital payment systems organize and evolve at massive scale. India’s UPI, operated by the National Payments Corporation of India, processes billions of monthly transactions, making it one of the world’s most heavily used digital payment platforms.

The authors emphasize that understanding the organization of digital payments requires an interdisciplinary approach combining economics, computer science, and institutional analysis. UPI’s architecture differs from Brazil’s Pix in significant ways: while Pix is directly owned by the central bank, UPI operates through the NPCI — a not-for-profit entity established by the Reserve Bank of India and the Indian Banks’ Association. This organizational model allows for rapid innovation while maintaining regulatory oversight.

UPI’s success rests on several pillars: a unified technical standard that allows any participating app to initiate payments, integration with India’s Aadhaar biometric identity system for account verification, support for both push (send) and pull (request) payment flows, and a tiered architecture that accommodates institutions ranging from major banks to small fintech startups. The ecosystem supports over 300 participating banks and dozens of third-party payment applications, creating competitive dynamics that drive continuous improvement in user experience.

The BIS paper notes that India’s approach to value-added services atop UPI — including bill payments, merchant QR codes, recurring mandates, and international remittance corridors — provides a blueprint for how fast payment systems can evolve beyond simple peer-to-peer transfers into comprehensive financial platforms. This evolution has implications for how other countries design their own systems, particularly regarding the balance between standardization and innovation.

Financial Inclusion Through Faster Digital Payments

Financial inclusion emerges as the most powerful thematic thread throughout BIS Paper 152. The evidence from Brazil, Costa Rica, India, and other jurisdictions consistently demonstrates that well-designed fast payment systems serve as potent instruments for bringing underserved populations into the formal financial system.

The mechanisms through which FPS drive financial inclusion are multiple and reinforcing. First, zero-cost person-to-person transfers eliminate the transaction fees that previously made small-value digital payments economically irrational for low-income users. When a domestic worker can receive payment instantly via a phone number, with no fees deducted, the value proposition over cash becomes compelling. Second, mobile-first design means that a basic smartphone — increasingly affordable and widespread even in low-income communities — becomes a sufficient entry point to the digital financial system.

Third, the data generated by FPS participation creates credit histories for previously “invisible” financial consumers. When individuals establish patterns of regular digital transactions, they become legible to credit scoring algorithms, potentially unlocking access to formal credit, insurance, and investment products. This progression from payments to broader financial services represents the full inclusion pathway that policymakers envision.

The BIS paper presents evidence from Brazil that is particularly striking: following Pix’s introduction, municipalities with higher Pix adoption saw increased openings of new bank accounts, more active use of existing accounts, and greater willingness to experiment with other digital payment methods. This complementarity effect suggests that fast payment systems create virtuous cycles of digital financial engagement, where each new user and transaction strengthens the network and encourages further adoption.

However, the paper also acknowledges persistent challenges. Digital literacy gaps, smartphone and internet connectivity limitations in rural areas, and trust barriers among populations with negative experiences of formal financial institutions remain significant obstacles. The most effective inclusion strategies combine technological innovation with targeted education, consumer protection frameworks, and infrastructure investments in mobile connectivity.

Cross-Border Payment Interoperability Challenges

While domestic fast payment systems have achieved remarkable success, extending instant payment capabilities across borders remains one of the most complex challenges in global financial infrastructure. BIS Paper 152 dedicates significant attention to the interoperability question, examining both the technical and institutional barriers that complicate cross-border FPS interlinkages.

The fundamental challenge is heterogeneity. Each country’s FPS has its own technical standards, messaging formats, settlement mechanisms, legal frameworks, and regulatory requirements. Connecting Brazil’s Pix to Mexico’s SPEI, for example, requires bridging differences in addressing schemes, compliance procedures (particularly anti-money laundering and know-your-customer requirements), foreign exchange settlement, and dispute resolution mechanisms. Multiply this complexity across dozens of potential bilateral connections, and the scale of the challenge becomes apparent.

Several initiatives are attempting to solve this puzzle. The BIS Innovation Hub’s Project Nexus aims to create a multilateral interlinkage platform that connects domestic FPS through a standardized interface, reducing the number of bilateral connections needed. Rather than each pair of countries building bespoke connections, Project Nexus provides a common “adapter” that translates between domestic systems. The project has progressed from proof-of-concept to active development involving payment systems in India, Malaysia, the Philippines, Singapore, and Thailand.

In Latin America, the Transfer365 CA-RD initiative connects Central American countries and the Dominican Republic for instant cross-border transfers. This regional approach — linking countries with strong existing trade and remittance flows — may prove more practical than attempting global interoperability from the outset. The CEMLA (Center for Latin American Monetary Studies) has also played a coordinating role, bringing central banks together to discuss standards and governance frameworks.

The paper notes that cross-border interoperability requires solving not just technical problems but also governance and economic questions. Who bears the foreign exchange risk in instant cross-border transactions? How are disputes resolved when they span multiple regulatory jurisdictions? What standards ensure that anti-money laundering obligations are met without introducing delays that undermine the “instant” nature of the payment? These questions require sustained multilateral cooperation and innovative institutional design.

Central Banks as Payment System Architects and Regulators

A recurring theme in BIS Paper 152 is the decisive role that central banks play in the success or failure of fast payment systems. The paper provides extensive evidence that central-bank-led FPS deployments consistently achieve broader adoption, lower costs, and more equitable access than purely private-sector alternatives.

In Brazil, the Central Bank’s direct ownership of Pix allowed it to mandate universal participation, set zero-fee policies for individuals, and ensure 24/7 availability from launch. In Mexico, the Banco de México owns and operates SPEI, applying similar principles of mandatory participation and public-interest pricing. In Costa Rica, the Central Bank’s stewardship of SINPE Móvil ensured that commercial incentives did not override inclusion objectives.

The paper identifies several key areas where central bank involvement proves critical. Governance and standard-setting ensure that all participants operate under common rules, preventing fragmentation and ensuring interoperability. Consumer protection frameworks build trust, particularly among populations with limited experience in digital finance. Competition policy — requiring open access and preventing dominant players from creating walled gardens — maintains the innovative dynamism of the ecosystem. And public-interest pricing, typically based on cost recovery rather than profit maximization, ensures that access is not rationed by ability to pay.

The Bank of Mexico’s proactive approach to promoting value-added services on top of SPEI demonstrates how central banks can drive innovation while maintaining their regulatory role. By defining standards for functionalities like request-to-pay, scheduled transfers, and merchant payments, central banks create the framework within which private-sector participants can innovate, compete, and deliver improved user experiences.

However, the paper also acknowledges the tension between central bank involvement and private-sector innovation. Too much central control can stifle experimentation; too little can lead to fragmentation and exclusion. The most successful models appear to involve central banks setting the infrastructure, standards, and rules, while allowing competitive private-sector participation in user-facing services. This “rails and apps” division — public rails, private applications — emerges as an increasingly influential design philosophy.

The Future of Digital Payments: CBDCs, Open Banking, and Beyond

BIS Paper 152 concludes with a forward-looking assessment of how fast payment systems will evolve in the coming years. Several trends emerge as particularly significant for the future of digital payments infrastructure worldwide.

Central bank digital currencies (CBDCs) represent a natural extension of the fast payment system paradigm. While FPS modernize the pipes through which commercial bank money flows, CBDCs would introduce a new form of digital central bank money directly accessible to the public. The paper notes that several Latin American central banks are actively exploring CBDC architectures, with the question being not whether CBDCs will arrive but how they will complement existing FPS infrastructure.

Open banking frameworks are increasingly being integrated with fast payment systems to create richer financial ecosystems. By requiring banks to share customer data (with consent) through standardized APIs, open banking enables third-party developers to build innovative services on top of FPS rails. Brazil’s implementation of Open Finance alongside Pix exemplifies this convergence, allowing fintech companies to access bank account information and initiate payments through authorized applications. Chile’s recent regulation to create and oversee retail payment automated clearing houses signals similar ambitions across the region.

QR code standardization for merchant payments continues to advance, with efforts to create interoperable QR standards that would allow a traveler from one country to scan a merchant QR code in another country and complete an instant payment through their domestic FPS. The World Bank and BIS are actively facilitating discussions on harmonized QR standards that could dramatically simplify cross-border retail payments.

The paper also highlights emerging functionalities being built atop fast payment systems: programmable payments that execute automatically based on predefined conditions, integration with government disbursement systems for social transfers and tax refunds, and embedded finance capabilities that allow non-financial businesses to offer payment services seamlessly within their platforms. These innovations suggest that fast payment systems are evolving from simple transfer mechanisms into foundational layers of digital economies.

For policymakers, financial institutions, and technology providers worldwide, BIS Paper 152 provides both a rigorous analytical framework and practical lessons from the countries leading the fast payment revolution. The evidence is clear: well-designed, central-bank-led fast payment systems can transform financial inclusion outcomes, stimulate broader digital financial engagement, and lay the groundwork for continued innovation in how societies move money. The challenge now is to extend these benefits across borders and ensure that the next generation of payment infrastructure serves the needs of all citizens, not just the digitally connected few.