The modernisation of payment systems in Azerbaijan: Examination of the new regulatory framework

Abstract

Development and expansion of cashless payments is one of the priorities in the economy. Accordingly, people need to be provided with wider access to payment services. Modern payment tools and new payment instruments should be employed. It is critical to specify precisely the rights and obligations of all parties concerned in the settlement process to develop cashless settlements. These aspects make necessary the establishment of a new category of payment service providers and formulation of oversight policy over their activities by taking into account the trends in international experience. General trends in the field show that amendments to current legislation and adoption of new laws on payment systems and services, leading to the establishment new service providers, are widespread not only in European countries, but also in ex-Soviet countries such as Russia, Georgia and Ukraine. Creation of new payment service providers and classification of payment services, commonly provided by banks, require a new approach by the CBAR and adoption of specific regulations. These regulations would ensure more effective and secure payment services and strong competition in the payment services market. This paper explains how important it is to adopt new regulations and make critical amendments to the current legislation to establish new payment service providers such as payment institutions and electronic money institutions, in the Republic of Azerbaijan, and summarises the essential requirements related to the improvement of payment services.