Retail Digital Payments: Competition, Innovation and the Role of Central Banks

Digitalisation has transformed retail payments for households and businesses. It has also changed the competitive landscape and industrial organisation of payment services. A recent Bank for International Settlements Bulletin reviewed developments in retail digital payments across advanced economies (AEs)[1] and emerging market and developing economies (EMDEs)[2], focusing on domestic payments rather than cross-border transactions [3].

The bulletin highlights a central policy issue: digital innovation has expanded choice and convenience, but it has not automatically produced effective competition. In many markets, incumbents remain powerful, new entrants face structural barriers, and the role of central banks is evolving from traditional oversight towards more active support for interoperability, access and market contestability.

The changing retail payments landscape

Retail digital payments can be understood through three components.