regulation and supervision of payment systems in peru josé luis vásquez paz jefe del dpto....
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REGULATION AND SUPERVISION OF PAYMENT
SYSTEMS IN PERU
José Luis Vásquez PazJefe del Dpto. Análisis del Sistema de Pagos
Banco Central de Reserva del Perú
Brasilia, September 2014
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PERU: BACKGROUND
Source: International Monetary Fund
Average Growth (2004 – 2013)
Average Inflation (2004 – 2013)
6.6 4.1
2.9 6.3
55 3
PERU LATAM
226
-29 -15
Economic growth and price stability enhance confidence in the means of payment, reducing both costs and risks to economic agents.
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THE ROLE OF THE CENTRAL RESERVE BANK OF PERU (BCRP) IN PAYMENT SYSTEMS
GOALS FUNCTIONS
Systemic Stability Oversight and Supervision
Safety Promotion
Efficiency User
Competition System Operator
Inclusion
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• 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 SUPERVISION?
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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.
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SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS (SIPS)
Supported by adequate National legislation (Payment Systems Law and BCRP Circulars) International Standards (Principles BIS)
Value Operator Oversight
RTGS Large-Value Central Bank Central Bank
ACH Low-Value CCE S.A. Central Bank
SSS Securities CAVALI Central Bank*
(*) Only Fund Settlement.
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SYSTEMICALLY IMPORTANT PAYMENT SYSTEMS (SIPS)
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PAYMENTS HAVE GROWN FASTER THAN GDP
2008 2009 2010 2011 2012 2013
4.9
5.6
6.2 6.3
6.7
6.1
Value of Payments/GDP (times)
Source: BCRP
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PREFERENCE FOR ELECTRONIC PAYMENTS
0%10%20%30%40%50%60%70%80%90%
100%
ene-
08ab
r-08
jul-0
8oc
t-08
ene-
09ab
r-09
jul-0
9oc
t-09
ene-
10ab
r-10
jul-1
0oc
t-10
ene-
11ab
r-11
jul-1
1oc
t-11
ene-
12ab
r-12
jul-1
2oc
t-12
ene-
13ab
r-13
jul-1
3oc
t-13
Estructura % del volumen de operaciones en la CCE
Cheques Transferencias
Operations in ACH(% share)
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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)
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PILLARS OF THE PAYMENT SYSTEMS LAW
• Finality.
• Governance/Transparency.
• Supervision/Scope and Powers.
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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.
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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.
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CENTRAL BANK REGULATORY SCOPE
CARD PAYMENTS PAYMENT SYSTEMS MONEY TRANSFER OTHERS
Networks LBTR (RTGS) Money Transfer E-MoneyOperators
Acquirers CCE (ACH) Telcos
Issuers SLMV (SSS) Other Arrangments
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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.
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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.
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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.
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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.
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E-MONEY LAW
• Consumer protection
- Trust fund.- Data protection.- Contracts
• Telco regulation
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BYLAWS
• Authorization
• Constitution
• Prohibition to extend loans
• Prudential measures
• Role of bank agents
• Aggregators
Operations Res. SBS
6283-2013
EEDEsRes. SBS 6284-
2013
Bank AgentsRes. SBS
6285-2013
• Authorized operations
• Simplified accounts
• Contracts
• Trusts
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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)
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ECOSYSTEM
DispersiónCréditosSeguros
TradicionalCooperativaMicrofinancieras
AceptaciónY Agentes
Micropagos
Nóminas, Beneficios,Serviciosprofesionales
Gobierno
ServiciosPúblicos
Giros y Remesas
TOP
MED
BASE
VentaDirecta
Source: Asociación de Bancos del Perú
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PLATFORM
Switch
Cha
nnel
s ASBANC Wallet Platform
Switch
Bancos
Red de Agentes
Operador 1 Operador 3 Operador 4Operador 2
Agentes Financieros
Tarjetas de crédito
Switch
Switch
ASBANC-Ericsson Wallet Platform
Can
ales
Source: Asociación de Bancos del Perú
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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.