Peruvian financial entities are preparing a system that will enable interconnection between several fintechs to boost direct and immediate payments throughout the country.
Several Latin American countries have sought to create their own interoperable real-time payment schemes in recent years. And now, Peru is innovating in this market, putting the country at the forefront of payment technology, which has been scaling its evolution in the region since 2016.
To make this possible, a group of 15 of the country’s largest financial institutions is working along with the Peruvian Electronic Clearing House (CCE), an organization that is responsible for all electronic bank-to-bank transactions in the nation and which has been partnering with leading global financial providers to bring the infrastructure needed to make way for Peru’s new joint venture of financial organizations.
“Our goal is to solve the market fragmentation problem that currently exists in Peru,” said Diego Alonso Rojas, Head of Innovation at the CCE, in an interview with Fintech Nexus. “For this reason, we act as mediators of national banking interoperability, connecting all transfer and payment system members.”
Facilitating user experience
For Rojas, the idea is to facilitate the user experience for customers, who can achieve greater financial inclusion through the interoperable real-time payment system.
The CCE recently defined a roadmap that outlines the basis for its work in the coming years. In the first stage, which is expected to take until the first half of 2023, it proposes to develop the construction of the interoperability model so that members of the transfer and payment system connect through the institution.
According to CCE’s Head of Innovation, at this first stage, users can perform peer-to-peer transfers using their mobile number as a pseudonym or proxy, which replaces the interbank account code (ICC) currently being used in the country. In the next step, the goal will be to allow a QR code to interoperate between financial institutions and e-wallets from broader segments of the economy.
“I believe this new integrated system will have a huge positive impact on the Peruvian payments ecosystem,” said Rojas, who was responsible for leading Peru’s first instant transfer project in 2016.
In January 2020, CCE processed about 580,000 instant transfers. According to the CCE reports, this number has multiplied in the last 2 years, reaching over 9.5 million domestic transfers the previous month.
Digitizing local payment methods
Over the past decade, financial institutions in the South American nation have been pulling to digitize local payment methods. In 2018, the CCE agreed with Mastercard Vocalink to enable its servers to operate on 24/7 schemes — previously, its infrastructure only ran on weekdays.
The CCE is now migrating its operations and already has partnerships with undisclosed new developers to begin integrating all participants into a single real-time system.
In the new system, existing instant solutions such as Yape and Plin will be integrated, enabling users of either company to transfer money instantly and free of charge to competing platforms.
Yape was created by Banco de Crédito del Perú (BCP). In its early days, the application was only available to BCP customers as an easier way to make payments between people. Then, in the mid-2020s, after the launch of its rival PLIN, the app began to expand its access to the general public.
By 2021, Yape saw exponential growth and now services 62% of Peru’s banking population, or around 6.2 million users.
But PLIN has not been left behind. Founded by financial services provider YellowPepper, in partnership with Peruvian banks BBVA, Interbank and Scotiabank, this app has gone on to compete strongly with Yape. It now dominates a significant share of the local market.
The financial integration, which the BCP supports, will already show its fruits in early 2023 and should, among other things, open the door for creating new fintechs with more beneficial regulations that boost the inclusion of citizens in the national financial system.