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.