Bank of the Republic of Haiti

CIRCULAR

No. 121

TO ELECTRONIC PAYMENT SERVICE PROVIDERS

Pursuant to Article 2 of the law of August 17, 1979 creating the Bank of the Republic of Haiti (BRH), and Articles 6, 72, and following of the law of May 14, 2012 concerning banks and other financial institutions, this circular applies to electronic payment services.

1. Definitions

The following definitions apply to this circular:

a) Liquid Asset: funds received from the public and placed by the Electronic Payment Service Provider in demand deposits or in seven (7) day BRH Certificates or treasury bonds of the same maturity.

b) Distribution Agent: entity that provides payment services on behalf of an Electronic Payment Service Provider.

c) Client: holder of an account domiciled in a financial institution or a wallet.

d) Electronic Payment Funds Account: transaction account held with an Electronic Payment Service Provider. The value shown on this account is called Electronic Payment Funds.

e) Deposit: funds received from the public that an Electronic Payment Service Provider collects in the client's account, with the obligation to return them according to the terms and conditions provided.

f) Electronic Payment Funds: funds recorded in an electronic register of operation accounts held by an Electronic Payment Service Provider and which:

1. refer to a determined monetary value having legal tender, in national currency;
2. correspond to a payment obligation of their issuer;
3. are issued against the receipt of the amount of funds for the purpose of payment, transfer, or withdrawal of said funds, in whole or in part, by means of the instruction given for this purpose by the user of the electronic payment funds;
4. are accepted by a third party as receipt of the amount of money intended to extinguish an obligation.

Rights arising from loyalty or reward programs offered by companies to their clients, which cannot be accepted by these companies or by companies affiliated with these programs except in exchange for goods, services, or benefits, provided that they cannot be converted into legal tender currency within the national territory, are not considered electronic payment funds.

g) Electronic Payment Service Provider (FSP): company incorporated as a joint-stock company that provides electronic payment means accepted, for the acquisition of goods or services, in a network of persons accepting these payment means by the transfer of legal tender currency from one deposit account to another.

h) Management of Electronic Payment Funds: set of operations by which an Electronic Payment Service Provider or a distribution agent offers digital financial services, such as:

1. opening electronic payment funds accounts;
2. issuing electronic support;
3. creating financial applications;
4. supplying electronic payment funds support;
5. debit and credit operations;
6. management of electronic payment funds accounts (execution of orders, issuance of account statements and certificates, etc.);
7. management of electronic payment supports (replacement and renewal of cards, etc.);
8. payment of goods and services at the FSP;
9. payment of goods and services at merchants;
10. payment of bills;
11. payment and receipt of salary on the electronic payment funds account;
12. verification of the electronic payment funds account balance;
13. withdrawal of money from the electronic payment funds support;
14. transfer of electronic payment funds;
15. storage of electronic payment funds;
16. opening and management of one or more electronic payment funds accounts for each client, in which credits equivalent to the amount of electronic payment funds issued against the receipt of a cash value, in national currency, or of certain virtual assets are recorded.

i) Technical Operator: technology company that provides technical services as well as material and software conditions for the processing of operations related to the issuance of electronic payment funds to an FSP, without itself being an FSP.

j) Electronic Support or Wallet: any magnetic, biometric, or computerized instrument of electronic payment funds allowing the storage of electronic payment funds to carry out the operations covered by this circular.

2. Scope of Application

This circular addresses:

• joint-stock companies whose main and regular activity consists exclusively of providing "electronic payment services";
• joint-stock companies operating in the field of technology or telecommunications and equipped with a department or division exclusively dedicated to the provision of "electronic payment services"; and
• deposit financial institutions authorized by the BRH and equipped with a department or division exclusively dedicated to the provision of "electronic payment services".

3. Electronic Payment Service Activities

Payment activities include:

1. services allowing the collection or withdrawal of money on an electronic payment funds account and all operations necessary for the functioning of said account;
2. management of electronic payment funds;
3. issuance and management of electronic wallets or supports;
4. opening and management of electronic payment funds accounts.

4. Process for Authorization of Operation and Registration of FSPs with the BRH

4.1. Generalities

Any company, incorporated as a joint-stock company, that provides or wishes to provide electronic payment services or similar services within the meaning of this circular is required to have prior authorization or a non-objection opinion from the BRH and to register with it as "Electronic Payment Service Providers".

The authorization or non-objection opinion is confirmed by a letter signed by the Governor of the BRH attesting that the latter acknowledges having examined the content of the application file for approval or non-objection opinion. This letter implies that:

a) the BRH has no objection to the project as communicated to it or to the continuity of the activities of an FSP; b) the project as presented is consistent with the priorities and strategies of the BRH and more precisely with the objectives of this circular; c) the project as presented is consistent with relevant laws, regulations, and required technical specifications and requirements.

A copy of the decision is displayed in all operating premises of the FSP.

Authorization is required by any company other than authorized deposit financial institutions, whereas a non-objection opinion is required by the latter. The BRH maintains and updates a register containing the list of authorized FSPs and information concerning them. The updated list is published on the BRH website.

4.2. Application File for Authorization or Non-Objection

The documents and information to be submitted for the application for authorization or non-objection are transmitted by letter addressed to the Governor of the BRH and conform to the model defined in Annex V of this circular. The person submitting the application must justify their authorization to do so by producing a notarized deed conferring the necessary powers. Shareholders who will hold a participation conferring 25% or more of the capital or voting rights of the institution subject to the application, the directors, the executives of the future institution, as well as independent auditors who will certify its accounts, transmit the required information by letter conforming to the models in Annex V, certifying the sincerity of the information provided and containing the commitment to inform the BRH of any significant change in their situation and the information communicated. The letter is addressed to the BRH through the person in charge of presenting the file. All required documents and information must be transmitted to the BRH for the file to be considered complete.

The application file for authorization or non-objection must be transmitted to the BRH in duplicate.

For the processing of the application file for authorization or non-objection, the BRH has a period of up to three (3) months, from the date of its receipt. During this period, the BRH may request any additional documents or information it deems useful for processing the file.

5. Technical Requirements

From a technical point of view, solutions proposed by an FSP must guarantee or ensure:

• the availability at all times of the platform used;
• the preservation of message integrity and information confidentiality;
• the authenticity and non-repudiation of transactions;
• interoperability (via technical and operational provisions) with other FSPs/actors in the national payment system.

When an FSP offers its services in partnership with a technical operator, it is required to ensure that the latter meets the aforementioned technical requirements.

Compliance with technical requirements must be attested by periodic audits carried out at least once every three (3) years, by a qualified, authorized, and experienced external firm, to guarantee in particular the relevance of the security device put in place. This technical audit, which may also cover service quality, must be extended to the FSP's partner technical operator, if applicable.

Furthermore, the FSP is required to put in place a business continuity device.

6. Minimum Share Capital and Adequacy of Own Funds Requirements

a) Regarding authorized deposit financial institutions, the exercise of electronic payment service activities is subject at all times to the capital and own funds requirements prescribed by the BRH circulars concerning them in these aspects.

b) Regarding FSPs that are not authorized deposit financial institutions, the minimum share capital required or capital endowment (in the case of a technology company with a department exclusively identified as an FSP) is five million gourdes (5,000,000.00 HTG). This capital must be fully subscribed and entirely paid up before the BRH authorization is granted.

The own funds of said FSPs consist of the following elements:

1. paid-up share capital
2. share premium surplus
3. legal reserves and other reserves
4. undistributed profits.

These own funds must, at all times, be greater than or equal to 5% of the outstanding amount of electronic payment funds issued.

Except for telecommunications companies and authorized deposit financial institutions, FSPs may only take participations in companies whose activities are related to the provision of services related to the electronic payment funds they issue.

7. Standard Agreement between the FSP and the Client

The relationship between an FSP and a client is governed by an agreement concluded between the two parties. To this end, the FSP submits a standard agreement and any modification of the clauses of the standard agreement to the prior authorization of the BRH under penalty of nullity. Furthermore, under penalty of nullity of the agreement between the FSP and the client, the FSP is required to ensure that said agreement contains the following mandatory mentions:

a) the conditions of use of services related to electronic payment funds; b) the description of possible uses of electronic payment fund units; c) the ceilings applied to authorized operations; d) the respective obligations and responsibilities of the client and the FSP; e) the risks and prudent measures inherent in the use of electronic payment fund units; f) the modalities, procedures, and time limit for opposition in case of theft, loss, forgery, or request for refund of electronic payment fund units;

g) the conditions and modalities for contesting operations performed; h) the conditions and modalities for reimbursement.

8. Client Protection

Prior to opening any electronic payment funds account, the FSP is required to identify its client by requesting a valid official identity document. A copy of said document must be kept in the client's file and regularly updated by the FSP. The latter must take all necessary measures to ensure that its distribution agents can correctly identify clients during transactions.

Client registration can be done in person or online. In the latter case, the technology used by the FSP must:

• allow the potential client to upload all required information to the registration platform, including the valid official identity document;
• be able to capture a photo of the client, which photo must be kept in the client's file at the FSP.

The FSP also has the role of protecting the client during their various transactions. Specifically, it must take measures to ensure:

a) compliance with strict security requirements for the initiation and processing of electronic payments; b) the protection of the client's financial data; c) any means of recourse in case of transaction disputes by a client; d) unconditional refund of funds for unauthorized withdrawals; e) the protection of client funds.

In particular, the FSP is required to provide the client, following any transaction performed, with an electronic receipt or notification message specifying:

a) the transaction reference number; b) the nature of the service; c) the name of the FSP; d) the name of the agent, if applicable; e) the identity of the sender or beneficiary of the transaction, as applicable; f) the date, amount, and fees of the transaction.

9. Protection of Funds Received from Clients by FSPs

Funds received in exchange for the issuance of electronic payment funds must:

a) be deposited without delay in one (or more) account(s) with one (or more) bank(s) or a deposit financial institution authorized by the BRH. The account(s) must be exclusively dedicated to these funds;

b) be clearly and distinctly identified in the accounting books of the FSP as well as in the banks or financial institutions where they are domiciled;

c) be subject to daily reconciliation with the global value of issued electronic payment funds.

10. Use of Funds Received from Clients

FSPs must place the entirety of funds received in exchange for issued electronic payment funds in liquid assets as defined by this circular and according to the following allocation:

• at least 80% kept in demand deposits;
• at most 20% placed in 7-day BRH certificates or Treasury Bonds of the same maturity.

Under no circumstances can these funds be used for other FSP operating activities. The total amount of funds received from clients must at all times be at least equal to that of the units of electronic payment funds issued in exchange.

11. Use of Distribution Agents

An FSP may entrust the management of electronic payment funds to distribution agents who act in its name and on its behalf under a mandate contract. The mandate contract defines in particular the rights and obligations of the parties, the nature and conditions of the operations that distribution agents are authorized to perform.

The FSP, before any business relationship with its distribution agents, submits a standard mandate contract to the BRH for validation.

Companies or individuals operating in the gambling sector, including lotteries, baccarat, casinos, cannot in any case be distribution agents for electronic payment funds.

When the FSP establishes contracts with distribution agents for the provision of their payment services, it is required to:

• establish, upon entering the relationship, the risk profile of the distribution agents and ensure its regular update subsequently;

• ensure that its agents display signs bearing the mention: "Authorized Agent of [Name of FSP]" or "Authorized Agent of [Name of Financial Institution/name of payment product]" in the case where the FSP is a Financial Institution;

• ensure the honorability and integrity of its agents;

• supervise the activities of its agents;

• assume full responsibility for actions or omissions of its agents relating to the financial services provided by them or questions related thereto;

• maintain effective control over the activities of its agents;

• contribute to the training of its agents, particularly in matters of combating money laundering and terrorist financing;

• publish and update on its internet site the list of its agents;

• ensure that its agents display the tariffs and fees applied to each type of transaction;

• establish limits for the provision of services agreed upon with their agents.

A distribution agent may provide its services to multiple FSPs and even to other financial institutions provided that it has a service agreement with each institution and FSP.

12. Capping of Cash Transactions of Clients on Electronic Payment Funds Accounts

12.1. Individual Limit

Individual limits in electronic payment funds must be established by the FSP for each duly identified client based on the risk profile of the latter that the FSP is required to establish upon opening their account and monitor throughout the duration of use of this account. However, the maximum individual limit that an FSP can assign to a client for cash deposit and withdrawal transactions cannot, at any time, exceed one hundred thousand gourdes (HTG 100,000.00) per transaction.

When a client holds electronic funds on multiple electronic supports offered by an FSP, the latter must ensure that the cumulative cash deposit and withdrawal transactions of said client on these different supports do not exceed the limit assigned to them.

12.2. Cumulative Limit

The cumulative cash deposits and withdrawals performed by the same duly identified client with an FSP on their electronic payment funds account(s) during a month are capped at an amount corresponding to four (4) times the individual limit assigned to them for these transactions.

As an example, if an FSP assigns a client an individual limit for cash deposit and withdrawal transactions of twenty thousand gourdes (HTG 20,000.00), this implies that:

• at no time can the client perform more than 20,000.00 gourdes of cash deposits or withdrawals on their electronic payment funds account;
• the total cash deposits or withdrawals performed or received on this account during a month cannot exceed 80,000.00 gourdes (that is, 4 times the individual limit of 20,000.00 gourdes for cash transactions).

The above limits may be modified by the BRH as the evolution of the fundamentals of the business environment justifies.

The individual and cumulative limits do not apply to receipt and transfer transactions of funds in electronic form, nor to distribution agents, nor to merchants or affiliated merchants forming part of the FSP distribution network. However, the latter are required to assign transaction limits to their agents based on their risk profile and their capacity in terms of turnover.

Payments in electronic payment funds to natural or legal persons exercising a commercial activity are accepted based on a contract between the FSP and the person concerned. These persons must equip themselves with an Electronic Payment Terminal (EPT) or a mobile phone or any other electronic instrument allowing the receipt of payment in electronic payment funds under the conditions set by the agreement between them and the FSP.

13. Electronic Payment Fund Operations

13.1. Mobile Telephony Operations

FSPs can offer electronic payment services to clients via mobile telephony. In this case, those who are not mobile network operators contract with a technical operator of their choice, authorized.

FSPs must ensure that each client is uniquely identified and that each transaction can be traced. In this regard, mobile phone numbers must be registered in accordance with existing rules.

13.2. Online Operations

Electronic payment funds can be used by users to perform online payment operations under the conditions set by the agreement between the FSPs and these users. To this end, the parties are required to respect any existing legislation in this matter.

13.3. Payment Card Operations

Clients can use the electronic payment funds stored in a card to perform the operations defined by this circular under the conditions set in the agreement between them and the FSPs. To this end, FSPs are required to respect existing regulations regarding payment cards.

13.4. Traceability of Operations

The FSP ensures the traceability of electronic payment fund transactions. To this end, it records in an electronic register all transactions related to the electronic financial services it provides and ensures the regular accounting of operations.

13.5. Settlement of Operations

All electronic transactions involving the operations covered by this circular are carried out in real time.

The order or payment commitment given by means of any electronic payment fund support is irrevocable. Any FSP must ensure that funds for withdrawal are made available to clients at least during opening hours.

However, in case of loss, theft, or fraudulent use of an electronic payment fund support, the holder of the electronic payment funds account can oppose any transaction following the procedures and modalities established by the FSP.

13.6. Refund at Any Time

The client can, at any time, withdraw all or part of their electronic payment funds. In case of system failure preventing the settlement of an operation, the FSP is required to refund the user the amount of the unauthorized or unexecuted operation as soon as possible. To this end, it restores