Boom of electronic means of payment in the DR

The use of electronic means of payment is increasing. This is the result of the preference of its use by financial users, the wide availability of digital products and services, as well as the initiatives promoted by the Central Bank to promote electronic payments.

The Payment and Securities Settlement System of the Dominican Republic (Sipard) provides the mechanisms through which monetary resources are channeled in the economy, so that economic agents and the general public can carry out their financial and payment transactions with security and legal certainty.

Currently in the country there is a notable expansion in the use of electronic means of payment, where a significant proportion of bank customers use the electronic channels available to them to make fund transfers and payments, withdrawals and deposits at ATMs, as well as purchases at physical and virtual point-of-sale terminals.

The electronic means of payment used in the Sipard are electronic fund transfers, such as: direct debit, direct credit and instant BCRD payments; debit, credit and prepaid cards, each of these with differential characteristics that determine the access channels, as well as the type of use and preference of their users.

To have an accurate view of the boom experienced by electronic means of payment, it is enough to observe that between 2008 and 2021, the volume of this type of payments increased 503.5%, while checks decreased 33.7%.

In 2008, 76.5 million electronic payments were recorded and 32 million checks were issued. In the year 2021, 462 million and 21.2 million, respectively, will be issued. In terms of participation, in 2008, 70.5% of payments were made with electronic means of payment and 29.5% with checks, while in 2021 they will be 95.6% and 4.4%, respectively.

It is appropriate to highlight that the covid-19 pandemic has accelerated the growing use of electronic means of payment, presenting an increase of 28.1% in the volume of transactions in 2021, with respect to 2019 before the pandemic. This behavior can be observed mainly in BCRD instant payments, which increased by 192.7% in the aforementioned period, that is, from 3.8 million transactions in 2019, they increased to 11.1 million in 2021.

There are aspects that have driven the expansion of electronic means of payment, evaluating the current situation of its main players, such as:

(a) Users, who nowadays have greater access to the internet and electronic devices such as cell phones, computers and tablets, where in 92.7% of households there is a cell phone and 9.5 million internet accounts are available , which has allowed them to be better informed about financial and payment services, as well as the rights that correspond to them.

These users prefer the use of electronic channels for their transfers and payments, especially those channels that allow immediate crediting. In this sense, by the end of 2021, 5,566,792 internet banking users will be registered, 299.9% higher than the number of current users as of December 2014 of 1,392,051.

b) Banking institutions are devoting more resources to expanding services through electronic channels and offering new digital products. To date, 100% of multiple banks offer services through internet banking and 90% of savings and loan associations, as well as 58% of savings and credit banks, which evidences the recognition of the importance of digitalization and services through electronic channels.

c) New and traditional non-bank payment service providers are making inroads with innovative and attractive alternatives, such as payment system administrators, acquiring companies and ATM network administrators, the latter with almost 150 such devices operating in areas of the country traditionally with few cash dispensers; and,

d) The Central Bank is constantly updating the regulations on payment systems and modernizing the technological and operational infrastructure that provides services to the payment systems, thus guaranteeing the security of Sipard’s payment settlement services.

In this regard, when evaluating the causes of the strong increase in payments through electronic means, it is important to highlight the stellar role played by the Central Bank through accurate and timely measures, such as the implementation of the RTGS system to settle in real time all payments made between financial intermediaries, securities intermediaries, the centralized securities depository, the Social Security Treasury and the National Treasury, as well as the Central Bank itself.

This platform is also used to settle transactions in the country of Visa and MasterCard cards, ATMs, checks, direct debits and credits (ACH), mobile payments and bank subagents. In the case of the latter, they correspond to transactions made in the almost 5,000 sub-agents operating throughout the country, which facilitate access and use of financial and payment services to communities with no banking presence, as well as contribute to inclusion and banking penetration.

Likewise, the Pagos al Instante BCRD service has been another determining factor in the boom of electronic means of payment. Through this service, bank customers can transfer funds and make loan and card payments 365 days a year, from 7:00 a.m. to 11:00 p.m., with a maximum accreditation time of eight minutes.

This service has been very well received by bank customers, who are increasingly eager for immediacy and security in their payment transactions. In 2021 alone, 11.1 million transactions were made, while 0.2 million payments were made in 2015. From the launch of the service in November 2014 to December 2021, 24.8 million transactions have been made.

In the regulatory area, the Central Bank has not ceased to provide Sipard with the necessary regulations that allow access and operation of payment service providers with equity and regulatory certainty, as well as the due protection of the users of these services.

To such effect, through the integral modification of the Payment Systems Regulations, approved by the Monetary Board through its Second Resolution of January 29, 2021 and the approval of its complementary instructions, the aforementioned objectives are met and therefore contribute to promote the development of the financial activity and the economy in general.

In this sense, the new regulatory framework has enabled the entry into the Sipard of payment fintechs, such as electronic payment entities and payment aggregators, which through the management of electronic payment accounts and other payment instruments, respectively, promise to bring payment services to traditionally underserved sectors that are alien to traditional financial services.

In a financial and payment system in constant evolution, the Central Bank remains as guarantor of the proper functioning of the Sipard, thus complying with the provisions of Article 15 of Law 183-02, Monetary and Financial Law, regarding its functions of “supervision and final settlement of payment systems”.

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