Fintech Payments in Public Financial Management: Benefits and Risks
Majid Bazarbash and
No 2023/020, IMF Working Papers from International Monetary Fund
Fintech payments leverage large digital platforms to fill gaps in the traditional payment system. They have made great strides in increasing access to payment services in several countries around the globe. At the same time, like any innovation, the new payment models are exposed to risks in their operating environment. We review the main fintech payment models (mobile money, internet-based fintech payment, and digital money) and discuss operational and financial risks as well as challenges they face. We then explore how public financial management (PFM), especially treasury payments and non-tax revenue collections, could benefit from fintech payments by providing examples of early fintech applications in different countries and discuss the challenges of integrating them into the public sector. The use of fintech in public finance could bring various benefits—including strengthening fiscal transparency, improving budget planning and execution, and upgrading cash management—if public sector institutional and technological capacities are strengthened and risks are adequately mitigated.
Keywords: financial technology; fintech; public financial management; payments; budget systems; financial management information system; payment model; payment application; treasury payment; payments development; applications in Senegal; Mobile banking; Digital currencies; Global; Caribbean; Middle East; Asia and Pacific; North Africa (search for similar items in EconPapers)
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