Regulatory environment The introduction and application of new technologies in the payments area have led to greater innovation, the introduction of new payment channels as well as new methods of delivering payment services more efficiently at lower costs to a wider spectrum of society and consumers. However, these have also brought on new risks. Regulators, providers and issuers have taken into consideration the risks that each of these various payment modes may have on the safety of the payment systems as a whole. Safeguards have to be put in place to instill public confidence in the usage of these innovative payment services or channels. In this regard, it is vital for regulators to impose prudential requirements on the providers and issuers of the electronic payment systems and instruments. The need for sound regulation and supervision is further exacerbated by the fact that criminals are constantly on the lookout to exploit the weakest link or point in the financial system. The risk of the new and increasingly popular payment mechanisms being used as conduits for money laundering and combatting the financing of terrorism (AML/CFT) activities is also a growing concern for central banks and financial intelligence units around the world. The increasing use of electronic payment systems, particularly electronic money, for making cross-border payments makes them vulnerable to exploitation for criminal purposes. Therefore, all parties involved in the payment value chain have to be vigilant to ensure that they are not exploited for such purposes.
Going forward, efforts would also be geared towards leveraging on the high penetration of mobile phones in Malaysia, even amongst the lower income groups. Thus, the convergence of electronic money and mobile phone hold immense potential to reach the unbanked and underserved segments of the population, particularly in the rural or non-urban areas. The mobile channel and electronic money instruments can, not only allow mobile payment and remittance services to be offered to these communities, but can also act as the gateway to extend further financial products and services including credit, savings and insurance. These would bring more from these communities into the formal financial system and economic mainstream and would transform the livelihood of the poorer segments of society. The development of a more inclusive financial system is one of the focus areas, apart from electronic payment in the new financial sector blueprint that Bank Negara is in the midst of formulating. Going green Electronic payment also enables businesses to move towards eco-friendly work environment and practice social responsibility through “green” initiatives. Yes, we are conscious of the “Equator Principles” in finance and banking. The movement away from paper via online banking and electronic payment and the elimination of the need to drive to and from bank branch offices allow customers to reduce their carbon footprints. Statistics have shown that if  2  BIS Review 69/2010  20% of households in the world switch to online payment modes, an estimated 1.8 million trees equaling to 100 million pounds of paper would have been saved.