Technology Focus: Programmable Payments

Programmable payments are often talked about in the context of Central Bank Digital Currency (CBDC), but they are possible with any digital payment. The Federal Reserve of Atlanta has written a useful blog explaining them ¹.

Despite all their potential, programmable payments are not yet widely used currently for two reasons.

First, the technology, particularly blockchain-based systems, can be complex - requiring specialised expertise, which can increase upfront costs.

Second, the regulatory environment around programmable payments is still evolving, especially for cross- border transactions. This creates uncertainty for businesses.

Putting those issues to one size, programmability offers real benefits.

What are programmable payments?

It is possible to write software programmes that allow payments to be made when specific conditions or events are met. Payment is automatic, unlike traditional payment methods which require manual approvals, or which are made to fixed schedules.