Operational risk management of using electronic and mobile money

  • 771 Views
  • 410 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License

The extensive use of electronic and mobile money causes additional risks, which complicates the work of electronic money issuers (EMIs) and the functioning of payment systems. The paper aims to investigate operational risk management in the process of using electronic and mobile money. A classification of operational risk types was carried out and the forms of their manifestation in payment systems using electronic and mobile money were characterized. The list of key risk indicators has been compiled to assess the operational risk factors of payment systems using mobile and electronic money; a classification of costs (losses) as a result of the implementation of operational risk events is proposed, dividing them into direct and indirect. Based on the statistics of the International Monetary Fund and the National Bank of Ukraine, the use of electronic and mobile money in certain countries of the world is analyzed. The results on the intensity of electronic money use are presented, and the value of the electronic money multiplier in Ukraine is calculated. To improve operational sustainability of EMIs, a general scheme for organizing the operational risk management process in payment systems using electronic and mobile money is presented. Particular attention is paid to the regulatory and supervisory measures aimed at supporting the operational sustainability of EMIs and payment systems under their control. The issues discussed in this paper are relevant for the debate directed at the implementation of balanced approaches to operational risk management in the process of using electronic and mobile money in developing and emerging economies.

view full abstract hide full abstract
    • Figure 1. Issue and circulation of electronic money in Ukraine in 2014–2021
    • Figure 2. Scheme for organizing the identification and documentation of events that have resulted in operational risk
    • Figure 3. Scheme for organizing the operational risk management process in payment systems using electronic and mobile money
    • Figure 4. A system of regulatory and prudential measures aimed at supporting the operational sustainability of EMIs and payment systems under their control
    • Figure A1. Key steps in assessing the operational risks of a payment system using electronic payment instruments
    • Table 1. Relative importance of e-money payments in selected countries of the world in 2015 and 2020 (in value of card and e-money payments, %)
    • Table 2. Number of mobile money transactions per 1,000 adult citizens in selected countries of the world in 2015–2021, units
    • Table 3. The total amount of outstanding balances on active mobile money accounts in 2015–2021 (in millions of national currency)
    • Table 4. Characteristics of operational risk manifestation forms in electronic and mobile money payment systems
    • Table 5. Estimation of realization probability, potential loss levels and risk exposure as a result of the impact of certain types of EMI activities’ operational risk
    • Table 6. Classification of losses (damage) as a result of operational risk events
    • Table 7. Measures to prevent and limit the impact of operational risk factors to maintain proper operational sustainability of EMIs
    • Conceptualization
      Volodymyr Mishchenko, Svitlana Naumenkova, Andrii Grytsenko
    • Formal Analysis
      Volodymyr Mishchenko, Svitlana Mishchenko
    • Investigation
      Volodymyr Mishchenko, Svitlana Naumenkova, Andrii Grytsenko, Svitlana Mishchenko
    • Methodology
      Volodymyr Mishchenko, Svitlana Naumenkova, Andrii Grytsenko
    • Writing – original draft
      Volodymyr Mishchenko
    • Project administration
      Svitlana Naumenkova
    • Visualization
      Svitlana Naumenkova, Svitlana Mishchenko
    • Writing – review & editing
      Svitlana Naumenkova, Svitlana Mishchenko
    • Supervision
      Andrii Grytsenko