The Central Bank of Paraguay ("BCP") by Resolution No. 1, Act No. 35 dated 11 July 2023, approves and brings into force the General Regulation of the Payment Systems of Paraguay (SIPAP Regulation). This new resolution also repeals several previous resolutions regulating the matter, including Resolution No. 1, Act No. 67 dated 27 December 2012 "General Regulations of the Payment Systems of Paraguay", the former SIPAP regulations, Resolution No. 24 of Act No. 54 dated 25 August 2011 "Project for the Modernization of the Payment Systems of Paraguay - Alternative Network for the Payments and Securities Systems of the BCP", Resolution No. 1, Act No. 26 dated 17 May 2022, "General Regulations of the Payment Systems of Paraguay", among others.

The new SIPAP Regulation includes innovations aiming to modernize Paraguay's Payments System. These innovations consist of the introduction of new defined terms that the previous regulation did not contemplate, among them; "Alia-s", "Commercial Customer", "Return of Funds", "Central Addressing Scheme (CAS)", "Payment Initiation Service Provider (PISP)", "Request for Return of Funds", "Request for Payment", "Self-managed Credit Transfer", and some modifications to terms already established by the previous regulation.

Another relevant change affects Securities Depositories (DEPO), in the case of non-fulfilment of bids. Closed bids in the DEPO that are not settled in the forms and at the times stipulated by the BCP, will make the participants who demand or offer liquidity liable to the following penalties:

• If the default is on the part of the claimant participant, the BCP may debit the equivalent of interest to the claimant participant to comply with the payment of the amount borrowed plus interest to the offering participant.
• In the event of default due to lack of funds or securities of the bidding/complaining participant, the latter may not trade in tripartite repo operations, short-term liquidity management (ADL) and permanent deposit facility (FPD) for a period of 5 business days.
• In the event of a repeat offence within 3 months of the last offence, the participant will be suspended for a period of 10 working days for the aforementioned operations.

The SIPAP Regulation also modifies the section of service participants, to whom it assigns new responsibilities, among them;

• The Beneficiary Participant, whether or not the sender of the transaction, shall be responsible for the validation of the Beneficiary Customer's data. It is mandatory to validate the correspondence of at least the following data: account number, type and number of identification document.
• The Paying Participant shall, prior to the remittance of the transfer, request confirmation from its customer of at least the following data of the beneficiary customer: name of the beneficiary, account number, type and number of identification document. Once confirmed by the customer, the transaction can be executed. This validation is required for both CAS and non-CAS transactions, in which case the data uploaded by the customer must be used for validation.
• The Paying Participant is responsible for including a data revalidation step in their applications before confirming the credit transfer by the customer, where at least the following is displayed: the account number, the name of the beneficiary and the entity.
• The Beneficiary Participant is responsible for validating and communicating to his client the receipt of a funds transfer, through the communication channels available to his clients, such as: SMS, email, push messages, etc.

Additionally, the SIPAP Regulation includes substantial amendments to the instant payment system (SPI), where new functionalities will be implemented and made available to customers from 11 September; such as:

• Return of funds: to return a transfer that was received incorrectly.
• Requesting a refund: if a mistake is made when making a transfer, the sender can request a refund. The return of the money is subject to the acceptance of the other party.
• Sub-participant: for cooperative customers, they may send and receive transfers up to Gs. 5,000,000, 7 days a week, 24 hours a day.

The SIPAP Regulation also includes new functionalities for customers starting 16 October, including;

• Payment initiation request: a business may contract a service from a third party (e.g. payment operators), in order to collect payments through the apps.
• Payment request: a business may contract the service of its bank or financial institution, in order to make payments through the apps provided by its institution.
• Use of aliases: the alias will be the only data required to make a transfer. The types of aliases enabled will be: ID number, RUC, mobile phone or email.