Competition in retail digital payments
Jon Frost, Head of Innovation and the Digital Economy, Bank for International Settlements*
OECD Competition Committee roundtable, 18 June 2025
*The views expressed here are those of the authors and not necessarily of the BIS.With thanks to Vatsala Shreeti for input.
In the past decade, new entrants are shaking up retail digital payments globally
Definition
Examples
Fintech
Technology-enabled innovation in financial services that could result in new business models, applications, processes or products … (FSB, 2017)
Source: author’s elaboration.
tech
Large companies whose primary activity is digital services, rather than financial services (Frost et al, 2019; BIS, 2019)
Big
Fintech apps see strong uptake in AEs, and big tech apps are larger in EMDEs
Advanced economies (AEs)
Millions of app downloadsIndex
Emerging market and developing economies (EMDEs)
Millions of app downloadsIndex
Source: Croxson et al (2023).
But new entrants are consolidating, through a wave of mergers and acquisitions
Data up to 30 May 2024. Each dot represents an M&A deal by Ant Group, Fidelity National Information Services (FIS), FISERV, Global Payments, Mastercard, PayPal, Block (formerly Square) or Visa as collected by PitchBookand Refinitiv Eikon. This excludes divestitures and intra-company operations. M&A deals are classified as “non-horizontal” when the acquiring and the target firm operate at different stages along the same payment chain, as determined by company reports. In “horizontal” deals, the acquiring and target firm are direct competitors in at leastone key business line. The size of each dot is proportional to the acquiring company market capitalisationon the day of the deal or, in the case of Ant Group, the valuation of Ant Group as of end-2018, multiplied by changes in the market capitalisationof Alibaba Holdings relative to end-2018.
Source: BIS (2020); Doerr et al (2023), updated.
Merger and acquisition (M&A) deals by global payment platforms
Public infrastructures like fast payment systems (FPS) can foster competition
Source: CPMI Red Book Statistics; Frost et al (2024).
In Brazil, Pixhas brought interoperable fast payments to over 90% of adults
Source: Duarte et al (2022); Frost et al (2025); updated as of November 2024.
…and offers dramatically lower costs for merchants
P2P payments still dominate, but P2B are growing Average costs to merchants by payment method
of number of transactions
1 For the United States, Canada and EU, average of interchange fees on credit and debit cards. Total cost to merchants may be higher.
Source: Duarte et al (2022).
In Costa Rica, similarly impressive progress thanks to SINPE Móvil
As SINPE Móvil use goes up, cash use goes down
Mn transactionsPer cent
The Herfindahl-Hirschman Index (HHI) has also fallen
Source: Araujo et al (2024).
Open banking stands to provide further benefits for competition
In Europe, more third-party payment service providers (TPPs) have entered the market
Number of TPPs
In the UK, over 11 million people have switched accounts with a dedicated switching service
Cumulative number of switches, in millions
Source: Eroglu et al (2025).
Conclusions
Fintech and big tech entrants have contributed to more competition in retail payments
…but withoutregulatory intervention, there is potential for rapid consolidation in the sector, and to the emergence of powerful new incumbents going forward
Public infrastructures like fast payment systems (FPS) hold out substantial promise to promote interoperability and thus to safeguard competition
In several jurisdictions, FPS have brought about large increases in access to and use of digital payments
Open finance also shows promise to foster competition –but it is still early days
Know your jargon
Fintech Technology-enabled innovation in financial services that could result in new business models, applications, processes or products… (FSB, 2017)
Fintech credit Big tech
Definition Credit activity facilitated by electronic (online) platforms that are not operated by commercial banks, e.g. P2P / marketplace lending (Claessens et al., 2018)
Stablecoin
Definition
A crypto-asset that aims to maintain a stable value relative to a specified asset, or a pool or basket of assets (Arner et al, 2020)
Central
bank digital currency (CBDC)
A type of digital payment instrument, denominated in the national unit of account, which is a direct liability of the central bank (Group of central banks, 2020)
Large companies whose primary activity is digital services, rather than financial services (Frost et al., 2019)
Crypto-assets
A type of private asset that depends primarily on cryptography and distributed ledger or similar technology as part of their perceived or inherent value(FSB, 2019)
Suptech Regtech
Any range of applications of FinTechfor regulatory and compliance requirements and reporting by regulated financial institutions (FSB, 2017)
the use of technologically enabled innovation by supervisory authorities to support supervision (Broedersand Prenio, 2018)
Open banking is taking off in jurisdictions around the world
Source: Eroglu et al (2025).
…fostering investment in fintech, and more new lending relationships
Source: Babina et al (2024); Eroglu et al (2025).
Central bank digital currencies (CBDCs) are seeing slow but steady uptake
Source: Frost et al (2025); Branch et al (2025).
References
Araujo, D, C Cantú, A Chinchilla, C Franco, J Frost and A Oconitrillo(2024), “Fast payments and banking: Costa Rica’s SINPE Móvil”, BIS Paper, no 152, December.
BIS (2020), “Central banks and payments in the digital era”, Annual Economic Report, Ch III, June.
CPMI (2025), “Red Book statistics on retail payments, currency and related indicators”, accessed 1 June.
Croxson, K, J Frost, L Gambacorta and T Valletti (2023), “Platform-based business models and financial inclusion: policy tradeoffs and approaches”, Journal of Competition Law & Economics, vol 19, no 1, pp 75–102.
Doerr, S, J Frost, L Gambacorta and V Shreeti (2023), “Big techs in finance”, in A Berger, P Molyneux and J Wilson (eds), The Oxford Handbook of Banking , 4th edition, Oxford: Oxford University Press.
Duarte, A, J Frost, L Gambacorta, P Koo Wilkens and HS Shin (2022), “Central banks, the monetary system and public payment infrastructures: lessons from Brazil's Pix”, BIS Bulletin, March.
Eroglu, H, G Cornelli, J Frost, F Rühmannand V Shreeti (2025), “The impact of open finance on the financial system”, mimeo.
Frost, J, P Koo Wilkens, A Kosse, V Shreeti and C Velasquez (2024), “Fast payments: design and adoption”, BIS Quarterly Review, March.
Frost, J, J-C Rochet, A Tombini and M Verdier (2025), "L'innovationfinancière en Amérique latineet dans les Caraïbes: Pragmatismeet progrès“, Revue d'économie financière, no 156.