Research & Analysis

Mobile Payments Infrastructure Access and Its Regulation

As this research, including interviews with stake holders, has shown, USSD access is an important competition issue in many countries since currently there are no effective substitutes for USSD that have been proven at scale. The importance of regulatory intervention in less competitive markets is therefore clear given the importance of a healthy and growing mobile payments market for financial inclusion, particularly in developing countries. 

This report lays out the issues that are relevant from a regulatory perspective—extent of jurisdiction of different regulatory agencies and the need for coordination among them. In our view, the guiding principle for regulation is that the remedy for harmful conduct should be the least restrictive to achieve the intended objective and should be proportionate to the extent of risk. And this appears to be the principle followed by several regulators who have successfully handled actual or potential anti-competitive outcomes in the mobile payments market. Regulators should consider regulation that not only improves competition but is also efficient and easy to implement. Mandating access if necessary and resorting to price regulation only if foreclosure concerns due to high prices are significant is the appropriate regulatory approach in our view, and also is a view independently expressed by many regulators. Since this is a relatively new market, appropriate regulatory remedies will evolve with regulators benefiting from the ideas and solutions implemented in other jurisdictions.