A Comparative Methodology for Measuring Supply-Side Domestic Payment Costs : Results from a Pilot Study

Overview & Synopsis

The cost of domestic payments affects individuals, businesses, and economies alike. Everyday transactions, such as paying a vendor, sending money to a family member, or settling a bill, may seem routine, but in many emerging markets and developing economies (EMDEs), the cost of these payments remains a barrier to full financial participation. High payment costs, particularly for digital transactions, reinforce dependence on cash, limit access to formal financial services, and ultimately constrain economic opportunity and resilience. Digital payments are a gateway to inclusion if they are affordable and accessible. Person-to-person (P2P) and person-to-business (P2B) payments are among the most frequent financial transactions for individuals and small enterprises. P2P digital payments allow people to manage expenses, support others, and transfer funds quickly, including between their own accounts. P2B digital payments underpin small-scale commerce, entrepreneurship, and daily consumption. These use cases are expanding rapidly, driven by wider smartphone and internet access, the rise in fast payment infrastructures, overlay services such as QR codes and aliases, and the evolution of open finance ecosystems. In this context, understanding the cost of domestic payments is critical to increasing usage and designing effective reforms. For low-income individuals and small businesses, even modest fees can deter the use of formal payment services. Measuring these costs helps identify specific frictions that hinder access and uptake of financial services, particularly digital ones. This evidence is essential for designing policies that enhance transparency, lower transaction costs, and promote more inclusive financial ecosystems. It also supports product development that better reflects users’ actual needs and behaviors. The World Bank has been measuring the cost of retail payments for more than a decade. In 2016, it introduced a comprehensive framework for collecting demand (consumers and businesses)- and supply (payment service providers)-side data on domestic retail payments. Implemented in 11 countries to date, the framework provides a detailed snapshot of payment costs by use case, payment instrument, channel, and economic actor, as well as potential savings from shifting to more efficient digital methods. In parallel, the World Bank maintains the Remittance Prices Worldwide database, the most comprehensive public resource on cross-border P2P transfer costs globally. More recently, Project FASTT (Frictionless, Affordable, Safe, Timely Transactions) has examined factors influencing the cost structure of domestic fast payments.