More joined up rules may be needed across the payments sector after the collapse of Germany's Wirecard, the Bank for International Settlements president has said.
Wirecard's demise has thrown a spotlight on payments - one of the fastest growing sectors in financial services and which central banks could enter themselves by developing digital forms of national currencies.
"One of the key aspects will be how different and non-bank participants and payment service providers can be incorporated into the whole scheme," Augustin Carstens said.
Payments have broadened out beyond banks to include so-called fintech firms which offer smartphone apps for making and receiving payments.
For now it was hard to tell if changes in regulation will be needed in the wake of the Wirecard scandal, Carstens said.
"As more details transpire I think that we will be able to pinpoint if or not further supervisory or regulatory action is needed," the BIS head added.
Meanwhile, German regulators twice looked into tightening the supervision of collapsed payments firm Wirecard and discussed it with the German and European central banks but no action was taken, a person with direct knowledge of the talks told Reuters.
Wirecard's implosion came years after the first allegations of fraud by some investors and journalists.
The focus is now shifting to how regulators supervised a company that was hiding a €1.9 billion hole in its books.
In 2017, officials from German financial regulator BaFin and the country's central bank, or Bundesbank, considered placing Wirecard on a list of financial companies to supervise but decided against it, the person said.
In the second half of 2019, there were discussions for months, which involved the European Central Bank, about putting Wirecard on a watchlist to give authorities more power to investigate it, the person said.
But the talks dragged into 2020 and were still inconclusive when they were "overtaken by events", even though anonymous sources had given the authorities information about irregularities at the company, the person said.
BaFin has said it asked Germany's privately-run accounting watchdog FREP in February 2019 to examine Wirecard's accounts but had yet to receive a report.
Wirecard, a hybrid company that processed electronic payments and also owned a bank, was once one of the hottest financial technology, or fintech, firms in Europe with a market value of $28 billion at its peak.
It filed for insolvency last Thursday owing creditors nearly $4 billion and its auditor EY said the massive financial hole in its accounts was the result of an elaborate and sophisticated global fraud.
It is not clear why regulators did not tighten Wirecard's supervision though a second source with knowledge of the matter said such a decision would have raised complex legal questions about whether the whole company could be defined as a bank.
As a financial technology company, albeit one that owned a bank, Wirecard was long considered as being in a grey area when it came to traditional bank supervision.
While BaFin regulated Wirecard's bank, putting the company on a list of financial firms would have put it fully under the supervision of the German financial regulator.
The second source also said getting all the different authorities to reach any agreement about Wirecard's supervision was a time consuming process.
Nonetheless, the lack of urgency is likely to intensify criticism of BaFin, which has already been attacked for investigating the investors and reporters who questioned Wirecard's accounts - rather than the company itself.
Wirecard started out handling payments for gambling and adult websites and now processes payments for companies including Visa and Mastercard.
Some of the world's biggest investors held its shares before a whistleblower said it owed its success to a web of sham transactions.
"Regulators ignored the concerns raised, preferring instead to pursue those that warned of this major fraud," said Fraser Perring, who bet on a fall in Wirecard's shares and co-authored a 2016 report that alleged fraud.
Following his claims, BaFin launched an investigation into Perring which ultimately led to a criminal inquiry backed by state prosecutors into market manipulation.
Jan Pieter Krahnen, a finance expert at the Goethe University in Frankfurt, said the case showed that Germany's light-touch approach to controlling companies was failing.
"We love self regulation in Germany," he said. "But this is only something that works in good times. Capital market supervision is a low priority for Germany."