Colombia’s Online E-Payments Platform: Private Sector Innovation Inspired by Government Vision

This case study discusses the growth of Pagos Seguros en Linea (PSE), an online payment platform in Colombia, which allows businesses and consumers to authorize electronic payments directly from their bank accounts to other agencies. The study suggests that PSE represents a marked success of public-private collaboration resulting from a process of work on all sides that ended up sharing a goal to promote electronic payments. It explains the main attributes of the platform and traces its creation. The case study is based on interviews with ACH Colombia’s management as well as representatives of PSE’s stakeholders and users. The study also presents lessons for governments, providers, and businesses seeking to expand electronic payments. Lessons include:

• Long-term policy commitment can spur financial service providers to develop effective and efficient payment products;
• Government mandates can be effective in driving usage of electronic payments;
• This kind of platform can be leveraged to promote electronic payments, once a financial inclusion strategy is in place;
• Interface between PSE and its merchant users is not easy for banks to develop and offer alone;
• Business model for such platforms needs to incentivize usage by merchants for both high- and low-value payments.