Fintech Payments in Public Financial Management: Benefits and Risks

IMF Working Papers, February 3, 2023

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Canonical URL: Fintech Payments in Public Financial Management: Benefits and Risks

Fintech payments leverage large digital platforms to fill gaps in the traditional payment system.
They have increased access to payment services in several countries around the globe.
New payment models are exposed to risks in their operating environment.
The paper reviews the main fintech payment models and discusses operational and financial risks and challenges.
The paper explores how public financial management (PFM), especially treasury payments and non-tax revenue collections, could benefit from fintech payments.
Potential benefits for public finance include strengthening fiscal transparency, improving budget planning and execution, and upgrading cash management—conditional on strengthened public sector institutional and technological capacities and adequate risk mitigation.

The paper discusses operational risks associated with new payment models.
The paper discusses financial risks associated with new payment models.
The paper discusses challenges fintech payment models face in their operating environment.
The paper discusses challenges of integrating fintech payments into the public sector.

Potential to strengthen fiscal transparency.
Potential to improve budget planning and execution.
Potential to upgrade cash management.
Specific PFM areas highlighted: treasury payments and non-tax revenue collections.

The paper provides examples of early fintech applications in different countries and regions (examples referenced by region and application context in the paper).