REGULATION AND
SUPERVISION OF PAYMENT
SYSTEMS IN PERU
José Luis Vásquez Paz
Jefe del Dpto. Análisis del Sistema de Pagos
Banco Central de Reserva del Perú
Brasilia, September 2014

Source: International Monetary Fund
PERU: BACKGROUND
Average Growth (2004 – 2013)
PERU
6.6
LATAM
4.1
Average Inflation (2004 – 2013) 2.9
6.3
55 3
26 2 enhance confidence in the means of
-29 -15 payment, reducing both costs and risks to economic agents .

THE ROLE OF THE CENTRAL RESERVE BANK OF PERU
(BCRP) IN PAYMENT SYSTEMS
GOALS
Systemic Stability
Safety
Efficiency
Competition
Inclusion
FUNCTIONS
Oversight and Supervision
Promotion
User
System Operator

WHY SUPERVISION?
• Market forces do not necessarily ensure the public objectives of safety and efficiency.
• Participants do not always assume all risks and costs associated with clearing and settlement.
• Factors like economies of scale, barriers to entry, etc. can potentially limit competition and create a dominant market position, which in turn may lead to lower service quality and higher prices.

WHY THE CENTRAL BANK?
• Payment systems are the basic infrastructure through which money flows across the economy, thereby facilitating the exchange of money for goods, services, and financial assets.
• They are instrumental in the implementation of monetary policy.
• A failure in the payment systems can affect the stability of financial firms and markets.

SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS (SIPS)
RTGS
ACH
Value
Large-Value
Low-Value
Securities SSS
(*) Only Fund Settlement.
Operator
Central Bank
CCE S.A.
CAVALI
 Supported by adequate National legislation
(Payment Systems Law and BCRP Circulars)
 International Standards (Principles BIS)
Oversight
Central Bank
Central Bank
Central Bank*

SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS (SIPS)

4,9
PAYMENTS HAVE GROWN FASTER THAN GDP
5,6
Value of Payments/GDP (times)
6,7
6,3
6,2
6,1
2008
Source: BCRP
2009 2010 2011 2012 2013

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
PREFERENCE FOR ELECTRONIC PAYMENTS
Cheques Transferencias

TIMELINE
• 1997 / 1998: Early studies (International Monetary Fund)
• 2000: Introduction of RTGS and ACH.
• 2005: Introduction of Securities Settlement System (funds).
• 2009: Law of the Payment Systems (Law 29440).
• 2011: New RTGS.
• 2013 / 2014: New studies (IMF and World Bank)

PILLARS OF THE PAYMENT SYSTEMS LAW
• Finality.
• Governance/Transparency.
• Supervision/Scope and Powers.

PRINCIPLES FOR SUPERVISION
• Transparency.
• International standards.
- Core Principles (2001): adopted
- Principles for FMIs (2012): work in progress
• Effective powers and capacities.
• Consistency.
• Cooperation with other authorities.

SUPERVISION TOOLS
• Monitoring: is performed by collecting information.
• Evaluation: Regarding observance of the Law and Bylaws.
• Induce changes: In case of problems of the administrative agencies, or problems with participants, or the existence of potential for improvement.
• Inspections on site.

CENTRAL BANK REGULATORY SCOPE
CARD PAYMENTS PAYMENT SYSTEMS MONEY TRANSFER
Networks
Acquirers
Issuers
LBTR (RTGS)
CCE (ACH)
SLMV (SSS)
Money Transfer
Operators
OTHERS
E-Money
Telcos
Other Arrangments

FINANCIAL INCLUSION
• The creation of a Commission to design the National
Strategy for Financial Inclusion (ENIF), promotes both greater access and use of quality financial services.
• The ENIF should promotes financial inclusion through the implementation of coordinated actions (the public and private sectors) in the context of the preservation of financial stability.
15

E- MONEY AS A FINANCIAL INCLUSION TOOL
E-Money has the potential to provide access to payment services to a large segment of the population, avoiding the costs and risks of cash.
Relies primarily on mobile telephony, which has a wide coverage across populations and regions in the country.
Facilitates access to payment services by low-income and/or rural population segments.

E-MONEY LAW
Purpose: Regulation of the issuance of e-money and for EEDEs.
Definition: e-money is a monetary value as represented by a claim on the issuer:
- stored in an electronic medium,
- accepted by entities or persons other than the issuer,
- issued for an amount equal to the proceeds received,
- convertible to cash,
- not a deposit and does not accrue interest.

E-MONEY LAW
Issuance: Only entities supervised by the Superintendence of
Banking, Insurance Companies, and Pension Funds (SBS), including “Empresas Emisoras de Dinero Electrónico” (EEDEs).
EEDEs:
-Their main purpose is the issuance of e-money.
-May not grant credit against the funds received.
-Carry out only operations related to their main purpose.
-Required to comply with the provisions on the prevention of money laundering and the financing of terrorism.
18

E-MONEY LAW
• Consumer protection
- Trust fund.
- Data protection.
- Contracts
• Telco regulation

Operations
Res. SBS 6283-2013
BYLAWS
EEDEs
Res. SBS 6284-2013
Bank Agents
Res. SBS 6285-2013
• Authorized operations
• Simplified accounts
• Contracts
• Trusts
• Authorization
• Constitution
• Prohibition to extend loans
• Prudential measures
• Role of bank agents
• Aggregators
20

INICIATIVES IN MOBILE PAYMENTS IN PERU
Mobile payment initiatives (currently at a stage of development) are led primarily by financial companies.
Mobile Payments
- Banks
- Using Smartphones or other devices
E-Money
- Bank and non-bank entities.
- Prepay cards (can use also cellphones)
- Agent network
Platform of E-Money (Bank Association)
21

ECOSYSTEM
TOP
MED
BASE
Aceptación
Y Agentes
Tradicional
Cooperativa
Microfinancieras
Dispersión
Créditos
Seguros
Micropagos
Servicios
Públicos
Nóminas,
Beneficios,
Servicios profesionales
Gobierno
Venta
Directa
Giros y
Remesa s
Source : Asociación de Bancos del Perú

PLATFORM
Operador 1 Operador 2 Operador 3 Operador 4
Agentes
Financieros
Tarjetas de crédito
Bancos
Source : Asociación de Bancos del Perú
Red de Agentes

FINAL REMARKS
• Payments systems regulation in Peru follows the international standards and ensures -through a careful supervision- the compliance by the systems administrators with the law and bylaws.
• Peru has implemented the regulatory framework for
E-Money as a tool for financial inclusion.
• Both regulation and supervision evolve with innovation and new international standards.