Resolution No. JPRM – 2024 – 029 – M

Through Resolution No. JPRM-2024-029-M (“Resolution“), issued on December 31, 2024, the Monetary Policy and Regulatory Board (“JPRM“) reformed the “Regulation governing payment methods, systems and fintech activities in Ecuador” contained in Resolution No. JPRM-2024-018-M.

The Resolution aims to guide the financial environment towards the interoperability of payment systems for real-time electronic money transfers (“Interoperability“).

Below, we highlight the key aspects that have been amended and introduced by the Resolution:

I. Concepts

The Resolution defines the following:

1. 1. 1. Payment Network Administrators: These entities pertain to auxiliary payment system operators qualified to provide clearing services, including the processing of payment transfers. This includes the Central Bank of Ecuador, which oversees the payment network facilitating money transfers among its members.

1. 1. 2. QR Code: a type of two-dimensional information encoding with specific and standardized fields defined by the Central Bank to facilitate payment transactions.

1. 1. 3. Distributed Directories: a data structure and operational model managed by Payment Networks, designed to store and manage keys along with all relevant information associated with customers.

1. 1. 4. Payment Network Members: these include private banks; public banks engaged in intermediation and receiving funds from the general public; credit unions; mutual savings and loan associations for housing; central funds; neobanks; Specialized Electronic Deposit and Payment Companies (SEDPES); participants in the Auxiliary Payment System duly authorized to provide “electronic payment processing services” on behalf of one or more financial entities; and the Central Bank of Ecuador.

1. 1. 5. Key: a unique and public identifier that enables the client to link their payment credentials with personal information, such as their identification number, mobile phone number, or personal email address, to make or receive payments.

1. 1. 6. Payment Networks: technological infrastructure with procedures and services designed to channel electronic money transfers for real-time payments.

1. 1. 7. Central Key Management Service: an operational model managed by the Central Bank, designed to manage the necessary customer information, facilitating payment interoperability through keys.

1. 1. 8. Payment Integration System: a technological infrastructure managed by the Central Bank, comprising procedures and services to manage key operations, process and clear inter-network payment transfers, and transmit the required information for settlement.

The concept of clearing is also redefined, establishing it as the process performed to determine the net position, whether favorable or unfavorable, of the Payment Network Members, which must be settled through adjustments to their accounts at the Central Bank.

II. Principles and Use Cases for Interoperability

Interoperability will be governed by principles such as accessibility, high service standards, scalability, neutrality, non-discrimination and fair access, as well as transparency.

The use cases to be considered for the implementation of Interoperability include: (i) Person-to-Merchant, (ii) Merchant-to-Person, (iii) Person-to-Person, (iv) Person-to-Public Institution; and (v) Public Institution-to-Person.

III. Obligations Related to Interoperability

The Payment Network Administrators and their Members are required to ensure Interoperability between their platforms and with existing infrastructures within the payment system to process real-time payments. To achieve this, Payment Networks must be connected to the Payment Integration System managed by the Central Bank.

Entities such as private banks, public banks, credit unions, mutual savings and loan associations for housing, Specialized Electronic Deposit and Payment Companies (SEDPES), and participants of the Auxiliary Payment System authorized to provide electronic payment services, along with others conducting electronic money transfers for payments, are obligated to guarantee interoperability and offer their clients payment services using keys. These entities must necessarily connect to any Payment Network to fulfill this requirement.

The members of Payment Networks have several obligations to ensure the system’s operationality and security. They must implement robust controls to prevent fraud and protect personal data, guarantee the availability of services 24 hours a day, 365 days a year, and inform clients about fees, transfer times, and service conditions before each transaction. Additionally, they must establish effective mechanisms to resolve complaints, errors, and claims, thereby protecting the rights of users. Furthermore, they have specific obligations related to the management and administration of keys.

Payment Network Administrators are responsible for processing intra-network operations with adequate security standards, validating keys and credentials, and ensuring the technological integration of their participants. They must also comply strictly with the operational and security regulations issued by the Central Bank, ensuring the reliability and efficiency of the system. In its role as the administrator of the Instant Payment Network, the Central Bank is also bound to fulfill these obligations.

Each payment network must maintain a Distributed Directory to validate access rules and execute key resolution. For this purpose, Payment Network Administrators must adhere to the regulations issued by the Central Bank.

IV. Access Technologies for Initiating Payments

Keys and QR codes are mechanisms and technologies used to initiate payments.

With respect to keys, the members of Payment Networks must establish processes for registration, modification, suspension, cancellation, portability, and ensure their updating in their Distributed Directories. Similarly, QR codes must comply with the technical standard issued by the Central Bank.

Transactions conducted using these technologies may not exceed the amount of one statutory wage.

V. Payment Integration System

The Payment Integration System will be created and managed by the Central Bank to facilitate real-time electronic money transfers. The Payment Integration System will process the various payments and key operations required by all participants interconnected with the Central Bank.

VI. Compensation and Settlement

Inter-network operations shall be cleared by the Central Bank, while intra-network operations shall be cleared by each respective Payment Network.

The settlement of both types of operations shall take place in the account that each member must maintain with the Central Bank.

VII. Information, Monitoring and Supervision

The members of the Payment Network and its Administrators must submit the information required by the Central Bank.

Actions that limit interoperability will be investigated and sanctioned by the Central Bank in accordance with the provisions of the Monetary and Financial Code.

VII. Implementation

Within ninety (90) days from the issuance of the Resolution, the Central Bank must determine compliance dates, integration criteria, and timelines for implementing the standards introduced by the Resolution.

The Payment Integration System must be developed by the Central Bank within eighteen (18) months. Upon its implementation, payment network administrators, participants, and members of payment networks subject to reserve requirements must, within the timelines established in the Resolution, make the necessary technological and operational adjustments to ensure interoperability and connect to the Payment Integration System.

The Central Bank must issue the “Regulation on QR Code Standards,” and all participants using QR codes for payments must adapt and comply with this regulation within six (6) months of its issuance.

Juan Fernando Riera, Associate at CorralRosales
jriera@corralrosales.com
+593 2 2544144