The AMF launches a study on Financial Inclusion in the technology-led globalization age

From cross-border retail payments standpoint and prospects for the Arab region


On the occasion of the Arab Financial Inclusion Day 2020 and within the framework of Financial Inclusion for the Arab Region Initiative (FIARI), the Arab Monetary Fund (AMF) is pleased to announce the publication of the study on Financial Inclusion in the technology-led globalization age: From cross-border retail payments standpoint and prospects for the Arab region, which takes place in the context of the launch of “Buna Platform”, an Arab Regional Payment, Clearing and Settlement System. This study aims to make a contribution to the existing dialogue at the regional and global levels on the importance of Cross-border retail payments and their impact on financial inclusion and provide food for thoughts for “Buna Platform” development going forward.

The importance of financial inclusion to development is nowadays widely recognized in the international development community and by policymakers in developed and developing economies. Globally, there is still an estimated of 1.7 billion adults do not have access to a transaction account that can be used to receive payments and make deposits. Given this fact, the Arab region's financial services industry and policymakers have taken over the past five years significant steps to recognize and address challenges to meaningful financial inclusion.

In this context and as the Arab region refines its financial inclusion strategies and while many foundations and drivers exist for achieving financial access objectives, it appears that the potential impact of modernizing payments systems in the region and expending digital financial services through a more extensive acceptance of electronic payments is substantial.

On another hand, cross border payments are becoming increasingly more prevalent in today’s global economy at a time where the dynamism digital innovation has brought new opportunities. This is also acute for cross-border retail payments as we may soon live in a world where not only large corporates, but also retailers, SMEs, and individuals use international payments regularly, using a range of solutions and providers through integrated commerce or trade interfaces. Particularly, the continued expansionary growth in remittances flows and e-Commerce further highlights the need for more attention to be placed on cross-border retail payment activities and how the ecosystem is evolving and finding efficiencies with which to facilitate such transactions.

In this regard, the need to diversify payments systems platforms and payment service providers to facilitate seamless cross-border payments at scale in the Arab region has never been greater, given that digitally enabled financial inclusion can help bring 63 percent of the Arab region’s individuals and MSMEs into the formal financial sector. Moreover, the region is home to a forecasted record-level of remittance flows of USD 60 billion in 2019, however, efforts to employ remittances in the formal financial system face several challenges, the most important of which is the high cost of sending and receiving remittances across the Arab region.

In addition, the economic and financial trends in the region point towards an acceleration of low-value payment flows, considering the growing international trade and labor & capital mobility within the region. This trend is expected to continue due to the multi-lateral policy initiatives aimed at enhancing intra-Arab regional economic growth. In fact, the Arab region presents an attractive hub for low value payments which comprise 70 percent of total transactions received in 2018. Moreover, the low value payments also comprise an important share of total transactions within the region, estimated at 60 percent in 2018.

However, cross-border regional payments are facing increasing challenges and pressure. On the one hand, traditional channels and tools are facing increased stringency for compliance requirements, in addition to risks and  also risks and challenges from fast-growing technology companies who have developed new business models that are attracting new customers and increasing their market share, especially in the context of the emergence of disruptive technologies, which is, from another hand, challenging Central Banks’ ability to trace and oversee cross-border transactions. At the forefront of these challenges are high transaction fees, lengthy compliance processes and long end-to-end transfer times are the main pain points associated with the current cross-border payments models.

To address these challenges, new technology and regional arrangements may complement the traditional channels and provide a more inclusive and efficient gateway to payments and cross-border remittances for both individuals and businesses alike. In addition, technological infrastructure is developing, such as faster payment systems, along with the potential for more transparent and simpler product offerings enabled by richer data and lower-cost processing. These new building blocks may make a difference on their own and, more importantly, may be combined in powerful ways to bring end-to-end solutions to financial inclusion.

Although a single global payment area is not likely to emerge any time soon, parties should nonetheless be able to pay everywhere, despite varying standards and infrastructures. In this perspective, this study highlights some of the key channels through which cross-border retail payments are made, provides an overview of the various interactions and dimensions of cross-border retail payment in the Arab region, touches on developments in the industry and the ongoing efforts to promote cross-border funds transfer in the context of increasing role of regional cross-border payment and settlement platforms.

Moreover, the study explores various prospects and opportunities that “Buna Platform”, an Arab regional payment and settlement system, can provide in expanding access and usage of financial services.

Finally, the study provides some high-level recommendations on what would need to be implemented at both policy-makers and market-players levels, including the development of  mobile payment platforms as well as a regional digital settlement currency, all with ultimate objective of support to the financial inclusion agenda in the Arab region.

An electronic version of the report is available on AMF (HERE) and FIARI partner’s website

About AMF

The AMF is a regional Arab financial institution, which was founded in 1976, and started operations in 1977, with the mission to lay the monetary foundation of Arab economic integration and to accelerate the process of economic development of its member countries, through training and capacity building on topics of interest, as well as financial and technical assistance to member countries to correct balance of payments disequilibria and implement structural reforms towards the modernization of their financial systems, and offering technical assistance to banking and monetary institutions in Arab countries with the objective of developing and strengthening their financial markets.


The Financial Inclusion for the Arab Region Initiative (FIARI) is a regional initiative established under the auspices of the Council of Arab Central Banks and Monetary Authorities’ Governors by the Arab Monetary Fund (AMF) in 2017 in partnership with the Deutsche Gesellschaft für Internationale Zusammenarbeit, GmbH (GIZ), the Alliance for Financial Inclusion (AFI) and the World Bank Group (WBG). It aims at promoting sustainable financial inclusion policies across the Arab region by supporting efforts to expand access to and usage of formal financials systems, particularly or households and MSMEs. The FIARI Initiative’s long-term goal is that policies for sustainable financial inclusion of Arab societies are developed and implemented in view of contributing to inclusive, long-term growth and shared prosperity in the region in alignment with the UN’s SDGs.

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