UN Principles for Responsible Digital Payments
Building trust, mitigating risks & driving inclusive economies
The world is moving to digital payments because they are swifter, safer, and more transparent than cash. As we rush to reap the benefits of digital payments, responsibility of design, safeguards and implementation must not be overlooked. By digitizing payments responsibly, we can swiftly reach financial equality and advance the Sustainable Development Goals.
2021 EDITION
A lot has changed since the United Nations-based Better Than Cash Alliance charted a fairer and quicker route to financial equality - in 2016. Technology advancements are remaking economies, societies and transforming the digital payments landscape. New financial services have proliferated.
Then the COVID-19 pandemic hit, the world was altered, and digital transactions from governments to citizens nearly tripled.
To respond to the urgent need for digital payments and prepare for the next pandemic or natural disaster, the United Nations Principles Responsible Digital Payments focus on the following:
- Prioritization of women as a key cornerstone for sustained development
- New technologies are developed and delivered responsibly
- A stronger user lens scrutinises all aspects of digital payments, and
- Recommendations to deliver positive lasting change
These Principles define who needs to be responsible, what it means to be responsible and how to be responsible. They are not intended to provide a technical analysis of what each Principle, such as transparency, means in practice.
The UN Principles for Responsible Digital Payments 1 were developed by the United Nations-based Better Than Cash Alliance, guided by its member governments, companies and international organizations. The Secretariat Team would like to thank their members for their bold leadership in responsible payment digitization practices and their insightful contributions to these Principles. This flagship resource responds to the UN Secretary General’s Roadmap for Digital Cooperation.
The PRINCIPLES
Treating people with fairness is the foundational principle. Yet many users are still being treated unfairly. This must alter. Why?
Because the next billion users of digital payments will encompass the currently underserved. These users face higher barriers to adoption and suffer more keenly if funds go astray. Inequality persists between the treatment of affluent and underserved users.
To attract sceptical users and build trust, fairness must be systemic.
The speed of growth of digital payments exerts pressure on systems, supply chains and software.
According to GSMA, 1.2 billion new users have been added between 2017-2020 and the curve is steepening.
Under this onslaught fault lines have widened.
Digital payments need to work every time. All users rightly expect their funds to be safe and readily available. Today, too often, this is not the case.
To unleash the full potential of digital payments for women, the industry must overhaul its approach. Half the world suffers from systemic biases that hinder adoption of digital payments.
Service design, AI algorithms, organizational structures and incentives all need to be re-imagined to ensure women’s equality.
Governments and the private sector are increasingly aware of the transformative power of female enfranchisement. Recent female-focused welfare transfers during the COVID-19 crisis underline this.
The Better Than Cash Alliance believes prioritization of women is now crucial to the realization of financial equity. Therefore, the need to prioritize women is the newest principle.
Preventing the misuse of data is fundamental to developing trusted digital payments.
Today, data is being generated in unprecedented volumes which increases risk of misuse. This is spurring conversations surrounding data ownership, consent, and bias.
Most current data protection and privacy models anchor on consent. However, users frequently do not understand what they are agreeing to, rendering consent meaningless. Replacing today’s flawed model with user control and accountable data stewardship will build trust.
The concept of ‘drifting consent’ and how it can be rectified by regulation, business processes, advocacy and policymaking is scrutinised here.
Billions of people remain excluded from digital payments.
Providers typically design for the savvy user, neglecting the diversity of need among the underserved.
Consequently, financial inclusion is no longer simply an issue of access. It is a question of delivering relevant, quality product choices to individual adopters.
Advancements in data analytics are helping to shape a future where user experiences are personalized irrespective of wallet depth. As digital payments proliferate, user-centric design is a critical determinant of success.
Rapid uptake of digital payments means new users are meeting old transparency ideas. These customers often find terminology surrounding digital finance opaque and confusing. This lack of understanding fosters distrust.
They are not alone. Even more knowledgeable consumers prefer not to read the small print.
Yet disclosure itself is not the only magic bullet.
Complexity in the ecosystem will only grow, granting members an opportunity to embrace a culture of transparency that empowers users. The time of paying lip service to redundant compliance terms has passed.
The full benefits of digital inclusion will only be unlocked when services are truly interoperable. Yet still, many users languish in silos preventing transaction. These silos stop digital payments from achieving more convenience, affordability and utility than cash.
Progress towards a more interconnected network of digital payments solutions has been steady. It needs to accelerate. The next leap forward hinges upon how swiftly governments, companies, international development organizations and providers explore the benefits of ecosystems founded upon open infrastructure.
Policy mechanisms, standards and incentives can unlock interoperability.
More users equal more cases of grievance. Redress is vital to the next billion adopters who are disproportionately impacted by loss of funds.
Today, too often, recourse systems are archaic and inadequate.
Recourse is sometimes an awkward topic to address. Yet updating recourse platforms benefits the provider and the user. Data generated by redress procedures is immensely powerful and can improve systems, processes and products.
It is now time to put recourse under the spotlight.
User trust presupposes a responsible ecosystem. To date, this has not been achieved.
Compliance has required accountability to rest with providers. However, users have remained confused and struggle to identify who is responsible for detecting or addressing problems. To realize a world where digital payments exceed cash, reliance upon statutory provision is insufficient.
Accountability and responsibility are evolving to become shared along the value chain. Building towards this new normal will result in stronger user trust, better value propositions and increased usage of digital payments.
Digital payments are safer, more affordable and more efficient than cash. Digital financial equity boosts women’s’ participation in the economy and accelerates attainment of the Sustainable Development Goals.
The challenge for digital payments is to be better than cash in all aspects. If they fall short, a billion new users become a billion reversions to cash.
IN PRACTICE
UN LEADERS
1 The name does not mean all UN member states endorsed or committed to follow this set of principles, which are for guidance purposes only. This resource was developed by the United Nations-based Better Than Cash Alliance, responding to the UN Secretary General’s Roadmap for Digital Cooperation, and UN leaders added their voices in support of these responsible practices for payment digitization.