ABSTRACT
The smooth operation of payment systems is often taken for granted both in the academic literature on financial integration and in practical policy considerations. However, recent developments in the European integration process have shown very clearly the critical role of payment systems in the financial integration process. In this context, the smooth and efficient functioning of payment systems, especially at the cross-border level, has been emphasised. When analysing payment system efficiency issues, the interaction between competition, cooperation and regulation also plays a key role. While competition among payment service providers has commonly been seen as an important contributor to efficiency, the need for cooperation in building infrastructures as well as in defining and implementing standards has also been raised, due to the specific characteristics of the payment industry. In this context, the appropriate role of regulation has also been debated. In essence, the focal point in the debate on payment systems efficiency has been the trade-off between competition and cooperation, and the potential impact of regulatory intervention.
