The Central Bank of Paraguay (BCP), in its capacity as the regulatory authority for Electronic Payment Means Entities (EMPEs), issued Resolution No. 6/2020 on April 16, 2014, amending Resolution No. 06/2014 “Regulations for Electronic Payment Means”.

The main motive behind Resolution No. 06/2020 is the need to promote and facilitate the operations of the SPVs, thus adapting them to the current market requirements, promoting the efficiency and stability of the financial system, fostering legal certainty, providing an efficient service to the financial consumer and ensuring the transparency of the rules that regulate payment instruments and services.

Among the most important novelties introduced by Resolution No. 06/2020 are the following aspects:

• The new resolution allows the electronic money account to be used also by the EMPE according to the account holder's instructions to make drafts, payments and/or transfers to the beneficiary. Previously only the account holder could use it.
• Increases the term for determining inactive accounts to 180 calendar days from the time the last transaction was made. Previously the term was 90 calendar days.
• Previously, Resolution No. 6/2014 only established the possibility of transferring the balances of inactive accounts to a bank account of the holder or that the EMPE enables a bank account, on behalf and order of the holder, regardless of the amounts of the balances. Resolution No. 6/2020 establishes two procedures, depending on the amount of the balance: (i) balances equal to or greater than two minimum wages, must be transferred to the deposit account in a financial institution specified by the holder in the service provision contract with EMPE or, in case of not having a bank account, EMPE must enable a bank account, for the account and order of the holder; and (ii) balances lower than two minimum wages, must remain in EMPE at the disposal of the holder, and EMPE must arbitrate the necessary means to communicate the holder the situation and proceed to the corresponding refund.
• The previous text of Resolution No. 06/2014 determined that it could not exceed 40 minimum wages. Likewise, the limit of three minimum wages was established for the monetary value of conversions and accreditations in account per calendar month; previously the limit was the amount determined by the Secretariat for the Prevention of Money or Asset Laundering (SEPRELAD) for low-risk clients.
• It is clarified that only commissions (if any) for cash reconversion and cash withdrawal may be deducted.
• Eliminates the list of minimum documents required to request the authorization to operate as an SPE. The new text indicates that the required documentation will be determined by the BCP through complementary regulations to Resolution No. 06/2020.
• Allows SMEs to set up Clearing Houses to achieve interoperability of transfers between their clients.
• The possibility of making deposits in the BCP as a guarantee is included. Previously, the only guarantee option was the constitution of an autonomous patrimony. Likewise, the possibility of offering guarantee mechanisms other than those authorized (deposits in the BCP and autonomous patrimony) is maintained, with the prior authorization of the Central Bank of Paraguay.
• Regarding the network of agents and points of sale, previously it was only established that no SPE could prohibit or restrict agents or points of sale from accessing or using other systems or means of payment duly authorized by the Central Bank of Paraguay. Neither could it, in any case, establish limits and/or penalties for the case that agents use the services offered by another different SPE; Resolution No. 6/2020 clarifies that the prohibition of restrictions is extensive to advertising actions, and brand visibility of the services offered by another different SPE and commercial actions that any SPE performs with any agent or point of sale.
• With respect to the limits on non-bank wire transfers, (i) it establishes a new transactional and operational limit, whereby the amount of non-bank wire transfer transactions made between electronic money accounts may not exceed, on a monthly basis, three minimum wages; (ii) allows the beneficiary, who has an electronic money account or bank account, to make partial withdrawals of the amount transferred; (iii) establishes that each non-bank electronic transfer that is not withdrawn by the beneficiary within ten calendar days from the moment the transfer is sent, must be transferred again to the sender or holder.
• The prohibition for EMPE to perform financial intermediation, pay interest, directly or indirectly by itself or through an intermediary, is maintained; however, it now allows EMPE to act as a service channel for financial entities.

In addition to the Electronic Means of Payment Regulations, SPEs are regulated by an extensive body of regulations that complement these regulations. The main regulations are the following:

• Resolution No. 1, Minute No. 77 dated 11.20.18, regulating the opening of Electronic Payment Medium Institutions

This resolution establishes the procedure for obtaining authorization to operate as an SPEEM, and is divided into three steps:

The first step establishes all the requirements that must be contained in the application letter together with the information that must necessarily be attached, among others:

• Information about the entity (name, address, telephone numbers, etc.);
• RUC;
• copy of the articles of incorporation of the company;
• shareholder list (including certain documentation corresponding to each shareholder);
• report of the entity that will act as trustee of the trust for the constitution of guarantees for the users' balances or, in case of offering different guarantee mechanisms, the detail, modality and arguments that justify the effectiveness of their execution;
• the list of the members of the Board of Directors of the company together with a list of the executive officers and attorneys-in-fact, with specific personal data (including certain documentation corresponding to each person);
• a business plan with specifically determined guidelines;
• an operational and organizational plan with precise guidelines;
• the contract signed with the telecommunications service provider;
• technical and economic conditions for the provision of telecommunications services;
• the certificate of no objection issued by the National Telecommunications Commission (CONATEL);
• the model adhesion contracts to be subscribed between EMPE and the agents, as well as with the points of sale, the technological service providers and the users; such contracts must follow the guidelines established in the regulations; and
• any additional information that the BCP deems necessary to verify the net worth situation and the origin of the shareholders' resources, as well as the technical capacity, experience and reputation of the administrators.

In turn, the second step indicates the procedure to be followed by the BCP once the application has been received. The procedure consists of a formal review of the documentation submitted, followed by the issuance of final legal and technical opinions which, if favorable, will allow the publication of the application in newspapers of wide circulation and then the submission of the draft authorization resolution to the BCP's Board of Directors.

Finally, the third step establishes that after 180 days from the issuance of a favorable Resolution of the BCP's Board of Directors, the SPVME will proceed to start operations. In the event of failure to start operations within such period, following a report from the Superintendency of Banks, the authorization to operate may be revoked, and a new presentation may not be submitted within a period of one year.

• Resolution No. 10, Act No. 8 dated 01.31.19, regulating the Information Regime for SOEs.

The resolution in question establishes the form and frequency in which the SPEs must send the information to be submitted to the BCP. At the same time, it empowers the Superintendency of Banks to expand the information to be sent by the SPEs, as well as its frequency. It also attributes the administrative sanctions of Laws No. 489/95 and 6104/18 to the failure to comply with the duty to submit the information in the established form.

The means of communication established as the recipient of the required data to be sent by the SOEs is by e-mail. Only the data to be reported on an annual basis must be submitted in printed form. It is indicated that the BCP will provide model forms for reports that must be used necessarily and in all cases contain in a clear and visible manner the entity to which the reported period belongs and express “This form is a sworn statement”.

The different data to be reported to the BCP are classified according to the frequency with which they must be reported.

(i) The total balance held by users, stores, agents and points of sale; the balances recorded in the trust; the daily amount of collateral deposited in the trust; and the name of the financial institutions depositing the funds must be reported daily. This data must be sent to the BCP the next business day after the close of the reported day.

(ii) To be presented monthly are the number of existing users, the number of active and inactive accounts, the number of complaints or claims with their respective procedures and results; the number and type of access channels by district; the number of accounts by district remitting and receiving non-bank wire transfers and making payments at merchants; the number of transactions by district remitting and receiving non-bank wire transfers and making payments at merchants; the number of transactions by district remitting and receiving non-bank wire transfers and making payments at merchants; the total number of accounts, transactions and amount by type of service or product; the number and amount by type of service or product; the total number of accounts, transactions and amount by type of service or product; the number and amount by type of service or product; the number and amount by type of service or product; the amounts of transactions by districts that remit, receive non-bank wire transfers and make payments at merchants; the total number of accounts, transactions and amounts by type of service or product; the number and amounts of accounts migrated to the financial system due to inactivity and linkage; the number of relevant incidents of service interruption, fraud, theft and/or robbery. These data must be submitted to the BCP within the first five working days following the close of the reported month.

(iii) Audited financial statements must be submitted annually; audited financial statements of the trust; and the report of external audits and security certifications carried out on both the technological infrastructure and the applications used for the operation of the SPEs.

• Resolution No. 11, Minute No. 63 dated 09.09.2019, granting authorization to administer the EMPE Clearing House and recognizing it as a payment system.

This resolution authorizes the company BEPSA DEL PARAGUAY S.A.E.C.A. to operate as administrator of the EMPES Clearing House and recognizes it as a Payment System, pursuant to the provisions of Law No. 4595/2012 “Payment and Securities Settlement Systems”. Likewise, the resolution approves the General Rules of Adhesion and Operation of the EMPES Clearing House and establishes that the settlements, product of the compensations made in the EMPES Clearing House must be made unfailingly in the settlement accounts held by the EMPEs in the BCP.

• CIRCULAR SB. SG. No. 00072/2020 - Request for information to the PMSCs

This Circular establishes that all modifications to contracts entered into between the SPEs and Agents, Points of Sale, Technological Service Providers and Users must be sent to the BCP within five days after the signing of the instrument.