Why The Digital Payment System Would Create Financial Stability in Sub-Sahara African Countries | [Pakistan Journal of Life and Social Sciences • 2025]

Author(s):

1. Paulin Tchumtcha Wembe: RMIT University,Blockchain Innovation HUB,

Abstract:

The payment system is a critical component of financial sector stability and inclusion. Payment systems help to maintain financial stability by reducing systemic and settlement risks, serving as a buffer against loss contagion, facilitating proper liquidity management, and effectively transmitting monetary policy. It refers to the mechanisms used to clear and settle monetary and other financial transactions. Payment systems and services that are secure, affordable, and easily accessible help to drive economic development, financial stability, and financial inclusion. Most sub-Saharan African countries' payment systems have remained unchanged since the end of Second World War. Payment remains dependent on fiat paper currency. This paper discusses how the transition from fiat paper currency to digital payment systems will improve financial inclusion, economic development, and financial stability of the country. This paper describes how a digital payment system based on low-power Internet of Things (IoT) devices can enable financial inclusion. Transaction accounts allow people, including the "unbanked," to make and receive payments in a cost-effective manner. Payment systems also promote economic and financial development: improvements in the national payments system save the economy money, whereas efficient post-trade processing and secure securities custody benefit financial markets in SubSaharan African countries.

Page(s): 459-465

DOI: 10.57239/PJLSS-2025-23.1.0036

Published: Journal: Pakistan Journal of Life and Social Sciences, Volume: 23, Issue: 1, Year: 2025

Keywords:

Payment System Financial Market Digital Financial Services Digital Economy Financial Stability

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