Resolution 126/2011

RESOLUTION OF THE BOARD OF DIRECTORS NO. 126/2011 SUBJECT: FINANCIAL ENTITIES MANAGEMENT – APPROVES THE REGULATION OF ELECTRONIC PAYMENT INSTRUMENTS

HAVING SEEN:
The Political Constitution of the State approved by referendum on January 25, 2009 and promulgated on February 7, 2009.
Law No. 1670 of October 31, 1995 of the Central Bank of Bolivia (BCB).
The Statute of the BCB approved by Board Resolution No. 128/2005 of October 21, 2005 and its subsequent modifications.
The Report of the Financial Entities Management BCB-GEF-SANA-DSP-INF-2011-244 of September 26, 2011.
The Report of the Legal Affairs Management BCB-GAL-SANO-INF-2011-348 of September 29, 2011.

CONSIDERING:
That the Political Constitution of the State establishes in its article 328 that it is an attribute of the BCB, in coordination with the economic policy determined by the Executive Branch, in addition to those indicated by Law, to regulate the payment system.

That according to article 331 of the Political Constitution of the State, financial intermediation activities, the provision of financial services, and any other activity related to the handling, use, and investment of savings, are of public interest and can only be exercised with prior authorization of the State, in accordance with the Law.

That Law No. 1670 provides in its articles 2, 3, and 30 that the BCB has as its objective to ensure the stability of the internal purchasing power of the national currency, for which it formulates policies of general application in monetary and payment system matters, all financial intermediation entities and financial services authorized by the Superintendence of Banks and Financial Entities, currently named the Financial System Supervision Authority (ASFI), being subject to its regulatory competence.

That the Financial Entities Management through Report BCB-GEF-SANA-DSP-INF-2011-244 establishes that given the constant technological innovations that favor the development of new services and payment instruments, the BCB must define the rules of use, acceptance, and operations with EPIs (Electronic Payment Instruments).

That according to Report BCB-GAL-SANO-INF-2011-348, the Legal Affairs Management concludes that the proposal for the Regulation of Electronic Payment Instruments is legally appropriate, as it does not contravene the current legal framework, and it is the competence of the BCB Board of Directors to consider its approval.

That, the BCB Board of Directors in its capacity as the highest authority of the Institution, is responsible for defining its policies, specialized regulations of general application, and internal rules, being empowered to issue norms and adopt general decisions that may be necessary for the fulfillment of the functions, competencies, and powers assigned by Law to the Issuing Entity, as established in articles 44 and 54 item o) of Law No. 1670 and articles 9, 11, and 24 of the BCB Statute.

THEREFORE,
THE BOARD OF DIRECTORS OF THE CENTRAL BANK OF BOLIVIA RESOLVES:

Article 1.- Approve the Regulation of Electronic Payment Instruments, in its VIII chapters and 31 articles, which in the annex, forms an integral part of this Resolution.

Article 2.- This Regulation shall enter into force from its approval.

Article 3.- The Presidency and the General Management are charged with the execution and compliance of this Resolution.

La Paz, October 4, 2011

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Marcelo Zabalaga Estrada

_________________________ _________________________ Hugo Dorado Araníbar Rolando Marín Ibáñez

_________________________ _________________________ Ernesto Yáñez Aguilar Gustavo Blacutt Alcalá

REGULATION OF ELECTRONIC PAYMENT INSTRUMENTS

CHAPTER I
GENERAL PROVISIONS

Article 1. (Object). This Regulation aims to regulate the conditions of use and acceptance of electronic payment instruments to promote the secure and efficient functioning of transactions carried out with these instruments and, in this way, promote the good functioning of the payment system.

Article 2. (Scope of application). The Regulation applies to issuers, holders, and users of electronic payment instruments as well as to entities that accept, administer, clear, and settle them.

Article 3. (Surveillance and supervision authorities). The surveillance and supervision authorities are the Central Bank of Bolivia (BCB) and the Financial System Supervision Authority (ASFI), respectively.

Article 4. (Exclusion). The provisions contained in this Regulation do not apply to electronic transfers ordered and/or carried out in systems administered by the BCB that are regulated in specific regulations.

Article 5. (Definitions). For the purposes of interpretation of this Regulation, the following definitions are established:

a) Mobile Wallet: Electronic Payment Instrument (EPI) that accredits a contractual relationship between the issuer and the holder through the opening of a payment account (exclusively in national currency) to electronically carry out payment orders and/or queries with a mobile device.

b) Automated Teller Machines (ATMs): Machines equipped with electronic or electromechanical devices that allow users of financial services to withdraw cash, deposit cash, query balances, transfer funds between accounts, or pay for services, through the use of an EPI. ATMs are also known by their English acronym: ATM (Automated Teller Machine).

c) Electronic Clearing House (CEC): The term CEC shall refer to clearing houses defined by Article 68 of Law No. 1488, which use electronic systems for the processing of their operations. They are auxiliary financial service companies whose sole object is the automatic and centralized processing of the clearing and settlement of payment instruments.

d) Loading of an EPI: Action applied to assign a monetary value to an EPI that allows its holder and/or user to carry out electronic payment orders with this instrument.

e) Commission: Amount contractually agreed, in national currency, that the issuer receives from the holder for the use and/or administrative services of an EPI.

f) Payment Account: A record associated with an EPI that reflects the operations carried out with it.

g) Electronic Money: Monetary value stored electronically. It has a direct equivalent with the value of legal tender banknotes and coins.

h) Issuer: Entity authorized by the ASFI that, in the development of its activity, issues one or more electronic payment instruments and manages and/or administers their operation.

i) Accepting Entity: Commercial or service establishment that accepts, on its own behalf or on behalf of third parties, the payment of goods or services with one or more electronic payment instruments.

j) To Cash Out: Action of converting electronic money into physical money.

k) Enforceable: Characteristic by which payment orders generated with and accepted by a payment system must be settled.

l) Cut-off Date: Scheduled deadline for closing the record of payments made with an EPI in a specific period.

m) Electronic Payment Instrument - EPI: Instrument that electronically allows the holder and/or user to instruct payment orders, withdraw cash, and/or query accounts related to the instrument.

n) Irrevocable or Definitive: Characteristic by which payment orders generated with an EPI and accepted by a payment system cannot be denied, disputed, reversed, or annulled by the party that generated them or by the party that received them.

o) Payment Order: Instruction or message by which the assignment and/or transfer of funds to the order of the beneficiary is requested. Includes electronic transfers.

p) Electronic Fund Transfer Order: EPI that, through a computer system and communication networks, allows the holder to carry out payment orders.

q) Operations Report: Document containing the summary of the handling of an EPI in a specific period.

r) Payment System: Set of instruments, procedures, and norms for the transfer of funds between natural and/or legal persons that are carried out using cash, checks, or other values, payment cards (credit, debit, and prepaid) up to electronic payment orders. Each of these payment instruments has its own characteristics, procedures, infrastructure, and clearing and settlement agreements.

s) Credit Card: EPI that indicates that a credit line has been granted to its holder. It allows making purchases and/or withdrawing cash up to a previously agreed limit. The granted credit can be settled in full at the end of a specific period or can be settled partially, taking the balance as extended credit.

t) Debit Card: EPI that, due to the maintenance of funds in a checking or savings account, allows electronically carrying out payment orders, cash withdrawals, and/or queries of the associated account.

u) Prepaid Card: EPI in which a certain value, previously paid to the issuer, is stored, through which the amount of consumption that will be made with the card is anticipated, with which electronic payment orders can be carried out up to the value of the loaded amount.

v) Holder: Natural or legal person who maintains a contractual relationship with the issuer for the use of their EPI.

w) User: Natural or legal person authorized by the holder to carry out operations with an EPI associated with their account.

x) Validity: Characteristic by which payment orders generated with an EPI and accepted by a payment system produce full legal effects between the issuer and the recipient.

CHAPTER II
ON ELECTRONIC PAYMENT INSTRUMENTS

Article 6. (Authorized electronic payment instruments). The following are authorized electronic payment instruments:

a) Debit, credit, and prepaid cards. b) Electronic fund transfer orders. c) Mobile wallets. d) Other electronic payment instruments authorized by the BCB Board of Directors.

Article 7. (Validity). For the issuance of an EPI, a contract must be signed between the issuer and the holder. The EPI will remain valid as long as the contract is valid, and may be renewed or cancelled by the holder within the timeframes and conditions established contractually.

Article 8. (Operations). Electronic payment instruments may be used in one or more of the following operations:

a) Cash withdrawals from savings accounts, checking accounts, or credit lines. b) Cash deposits into savings accounts, checking accounts, or credit lines. c) Loading and cashing out of the EPI associated with payment accounts. d) Payments with the EPI. e) Transfer of funds to another account or another EPI. f) Query of movements and balances.

Article 9. (Limit amount per operation with electronic payment instruments associated with payment accounts). The limit amount per operation with electronic payment instruments associated with payment accounts shall be one and a half minimum national salaries. This limit amount will be reviewed by recommendation of the Financial Entities Management and communicated through a circular of the BCB General Management.

Article 10. (Acceptance of operations with an EPI). An operation carried out with an EPI is considered accepted when it has passed all validations required by the issuer and therefore, can be cleared and/or settled.

Article 11. (Probative value and legal effects of operations with an EPI). Payment orders carried out with an EPI will have full probative value and the same legal and judicial effects as written files and records.

Article 12. (Termination of the payment order). Once the funds are deposited in the destination account, the payment order carried out with an EPI will be considered definitive and concluded from the operational and legal point of view.

Article 13. (Validity and irrevocability of payment orders with an EPI). Payment orders accepted with an EPI, their processing, and settlement are irrevocable or definitive, valid, and enforceable. No norm or practice may challenge, annul, or reverse them. In the event of a need for amendment, correction, or rectification due to a disagreement, error, prejudice, damage, or grievance with respect to a payment order carried out with an EPI, it may be amended only with a new payment order.

Article 14. (Clearing and settlement of operations with an EPI). When the operation of an EPI involves two or more issuers, the clearing and settlement of these operations must comply with the regulations for clearing and settlement issued by the BCB and the ASFI within the scope of their attributes and functions provided by Law.

Article 15. (Operational security of electronic payment instruments). The Financial Entities Management of the BCB will establish the security requirements for authorized electronic payment instruments, which will be communicated through a circular of the BCB General Management.

CHAPTER III
ON THE ISSUER OF ELECTRONIC PAYMENT INSTRUMENTS

Article 16. (Issuance of electronic payment instruments). Entities authorized by the ASFI, hereinafter referred to as issuers, may issue electronic payment instruments linked to savings accounts, checking accounts, credit lines, and/or payment accounts. The accounts that support electronic payment instruments, except by judicial order, cannot be closed, restricted in their use, or suspended while the EPI remains valid and/or has funds.

Article 17. (Obligations). The obligations of the issuer of an EPI are:

a) Safeguard the databases of personal information of clients, preserving the integrity of electronic records, as well as the data generated as a result of electronic payment operations, for a minimum period of 10 years from the date of the last accounting entry (in accordance with Article 94 of the Law of Banks and Financial Entities). These data may only be disclosed with the written authorization of the holder or the competent judicial authority.

b) Assume responsibility for the non-execution or defective execution of the holder's operations when they are initiated in a system, device, or terminal whose use has been authorized by the issuer.

c) Not directly deduct from the holder's accounts amounts for the payment of debts acquired through a credit EPI, unless the holder expressly manifests their authorization, which at all times will be renewable or revocable upon request.

d) Have a technological platform with the necessary procedures to carry out the operations of an EPI.

e) Have security and early warning systems in order to prevent the commission of fraud. These systems must generate reports that will be sent to the supervision and surveillance authorities, and to the holder with the frequency defined by the supervisor.

f) Provide information, in physical or electronic form, to the interested party in acquiring the EPI operations service before the signing of the contract.

g) Send to the holder, in the periods agreed contractually, a report of operations carried out with the EPI, according to the conditions established in this chapter.

h) Sign a contract with the holder in which the conditions of use of the EPI are stated in writing and, if applicable, by electronic means in clear and easily understandable terms.

i) Provide information on the EPI and send operations reports to the holder according to articles 18 and 19 of this regulation.

j) When applicable, maintain a contractual relationship with companies that provide technological support to the operation with an EPI, in which, among others, the applied security mechanisms, the confidentiality and safeguarding of the operations carried out, and the contingency systems that ensure the operational continuity of the EPI are stipulated.

k) In the event that information has been provided to unauthorized third parties, respond jointly and unlimitedly for the damages and losses caused to the EPI holder.

l) Attend to verbal and/or written complaints due to a disagreement, prejudice, damage, or grievance in the use of an EPI or reports of theft, cloning, or loss as established in the Regulation for the Attention of the Client and User issued by the ASFI.

m) Contract, at its cost, an external annual audit and attend to requests for special audit regarding the functioning of an EPI.

n) Provide to the surveillance and supervision authorities, with the frequency they require, at least the following information:

i. Name and commercial brand.
ii. Interest rates applied in the respective period, if applicable.
iii. Additional benefits granted at no additional cost to the holder.
iv. Commissions and other charges applied in detail.
v. Payment term (days from the cut-off date), if applicable.
vi. Financing term, if applicable.
vii. Validity period.
viii. Characteristics, coverage, and restrictions of offers, promotions, and prizes.
ix. Any other information related to the particularities of the EPI requested by the ASFI or by the BCB.

Article 18. (Information for the holder). The information to be provided by the issuer to any person interested in contracting an EPI must be clear, truthful, sufficient, timely, and expressed in simple terms. In rural areas, it will be essential to provide the information, in addition, in the predominant native language of the region. Likewise, if necessary, the necessary adaptation must be made to facilitate the understanding of people with disabilities and developed according to the specific requirements detailed in the ASFI Regulation on Advertising, Promotion, and Informational Material.

I. For the person interested in contracting the services, the information will include the facilities provided by the use of the EPI and the obligations it entails, and must include at least the following aspects:

a) Main characteristics of the service. b) Mechanism to determine the amount of interest, when applicable.

c) Detailed procedure for the calculation of the minimum payment, when applicable. d) Assumption and conditions in which commissions, amounts charged for penalty or sanction for non-payment, additional services charged, and other charges are collected, when applicable. e) Procedures to follow in cases of theft, cloning, or loss of the instrument. f) Procedure and deadline for complaints. g) Unit or person in charge of resolving disputes, as well as the means to establish communication with them.

II. Prior to the signing of the contract, the issuer must inform the client of all and each one of the contractual scopes and provide them with all the conditions of use and information required for their best decision, including the characteristics and conditions of the prizes and promotions in effect.

III. In the event of modifying, updating, or including new conditions, these must be communicated to the holder as well as to the ASFI, in accordance with what is established in this regulation, with due advance notice and enabling the rescission of the contract in case the EPI holder does not agree with the modifications and/or additions.

IV. In the event that the EPI can be used to carry out transactions abroad (outside the country of issuance), additionally facilitate to the holder at least the following information:

a) Procedure for enabling the EPI to make payments abroad. b) The commissions and charges applicable to transactions abroad and in foreign currency. c) The reference exchange rate used for the conversion of transactions in foreign currency, including the value date of said exchange rate. d) Restrictions on the usable value if applicable.

Article 19. (Operations report for the holder). In the case of electronic payment instruments associated with savings accounts, checking accounts, and credit lines, in the periods agreed contractually, the issuer will send to the holder in physical and/or electronic form, upon specific request of the holder, the operations reports that will include at least the following:

a) Identifications. Name of the issuer, address, brand, type of EPI, name and address of the holder, and identification of the assigned account.

b) Descriptions. When applicable, depending on the type of EPI, explicit enumeration of the items that the holder must pay, the date of payment, the reference number, the description of the concepts for which the holder must make payments, the amount of each of these concepts, the accepting entity, place, amount in bolivianos or any other currency as appropriate, results of promotional activities, customer service telephone numbers for the report of theft, cloning, or loss of the EPI, how and where payment can be made.

c) Financial Details. When applicable, in separate items it must include the cut-off date, payment date, interest rate applied, amount for financial interest, delinquent interest rate, amount of delinquent interest, previous balance, consumption in the period, minimum payment, payment term, payments made, and any debit or credit applied to the account, as well as a clear specification of the principal amount owed by the holder. All items must correspond to the respective period of the operations report carried out with the EPI.

d) Modifications to the contract. The operations report must have a space designated to inform the holder about all aspects related to variations to the contract as well as the procedure for its acceptance or rejection.

e) Additional information services. The issuer must make available to the holder additional information services that give them the possibility of verifying at any time the last transactions carried out, as well as the residual balance of value loaded or associated with an EPI, such as information via telephone, fax, email, Internet webpage, or other appropriate means.

f) Others detailed in specific ASFI regulations.

Article 20. (On the contract between the issuer and the holder). The issuer will send to the ASFI for its review the contract that establishes the functioning and operation with an EPI. The contract will establish the rights, obligations, and responsibilities of the issuer, holder, and user of the EPI, as well as the validity period of the EPI, the mechanisms to renew or cancel it, and will include at least the following:

a) A description of the EPI and, if applicable, the technical requirements of the communication equipment(s), electronic and/or computer systems necessary and their

//13. R.D. N° 126/2011 conditions of use, as well as usage instructions, including, where applicable, quantitative operational limits and applicable rates. b) A description of the obligations and responsibilities of the holder, user (where applicable), and issuer, including the necessary safeguarding measures to guarantee the security of EPI handling. c) Where applicable, the period in which transaction amounts will be charged or credited to the holder's account. d) Where applicable, the commissions and charges the holder must pay for the use of the instrument or for certain types of transactions and/or services, as well as the applicable interest rate and its method of calculation. e) The time period during which the holder may file claims and the avenues for recourse and procedures available to them.

Article 21. (Modifications to the contract between the issuer and the holder). To modify the conditions of use of an EPI established in the contract, the issuer must request a new review of the modified contract to the ASFI. The modified contract may only enter into force when it is signed by the EPI holder.

Article 22. (Of the contract between the issuer and the accepting entity and/or administrative company). The accepting entity and/or administrative company of an EPI must be contractually obligated to the issuer to:
a) Respect the terms of the EPI usage contract between the holder and the issuer. b) Identify in a visible place the electronic payment instruments they accept. c) Accept payments in cash and those made with electronic payment instruments on equal terms. d) Not establish surcharges for payments made with electronic payment instruments. e) Not establish minimum purchase amounts, nor eliminate discounts for the use of electronic payment instruments. f) Provide the holder and/or user of the EPI with information about the transaction once completed, in accordance with the conditions established in the following article. g) Verify the identity of the holder in each transaction.

//14. R.D. N° 126/2011 h) Establish and execute control measures to prevent fraud, according to the specific regulations issued by the ASFI and BCB. i) Receive payment for services rendered. j) Request information related to the EPI they accept from the issuer and/or the company administering the EPI. k) Where applicable, the transaction information will be provided in writing and, where applicable, by electronic means in easily understandable terms, and must include at least the following:
i. A reference that allows the holder and/or authorized user to univocally identify the transaction and, where applicable, information regarding the acceptor before whom the transaction was made.
ii. The amount of the affected transaction in the holder's account in the billing currency and, where applicable, the amount in the foreign currency in question.
iii. The amount of any commissions and charges applicable to specific types of transactions.

Article 23. (Prizes, promotions, or offers). Prizes, promotions, or offers promoted by issuers for the use of an EPI must comply with the provisions of the current legal regulations.

CHAPTER IV
OF THE COMPANIES THAT ADMINISTER
ELECTRONIC PAYMENT INSTRUMENTS

Article 24. (Obligations). Companies that administer electronic payment instruments are obligated to:
a) Provide the issuer of an EPI with administration services or other services agreed upon contractually, for transactions carried out with an EPI in national and international establishments affiliated with accepting entities and in ATMs, based on the contract signed with the EPI issuer. To this end, they must establish the obligations and responsibilities of the accepting entities and control their compliance. b) Safeguard the databases of information provided by the issuer, as well as the information they generate as a result of their activity.

//15. R.D. N° 126/2011 c) Provide the BCB and ASFI with information regarding the activity carried out with an EPI.

Article 25. (Rights). Companies that administer electronic payment instruments have the right to:
a) Receive payment for services rendered. b) Access the information received by the BCB and the ASFI related to the EPI they administer.

CHAPTER V
OF THE HOLDER AND/OR USER

Article 26. (Obligations of the holder and/or user). The obligations of the holder and user of an EPI are the following:
a) Use the EPI personally and not reveal or entrust to third parties the security keys for access to their own device, ATMs, and/or other computer systems. b) Where applicable, before signing payment receipts and/or before giving consent to the electronic transfer of funds, verify the amount and accuracy of the information. c) Be responsible for purchases made on internet sites and the information of their EPI that they provide. d) Safeguard their security keys and be responsible for the transactions they carry out.

Additionally, the following are obligations of the holder:
e) Maintain their payment capacity and conservation or expansion of the credit limit granted by the issuer. f) Keep their EPI active or, where applicable, cancel it. g) Indicate to the issuer a physical address or, where applicable, an electronic address for the issuer to send them reports of operations carried out with their EPI or any other pertinent information, and notify the issuer when they do not receive operation reports with their EPI within the period established contractually,

//16. R.D. N° 126/2011 unless the Law or other regulations establish longer periods, in which case the longer period will always apply. h) Where applicable, verify the interest rates and other charges applied to their account by the issuer, as well as the procedures to file claims and/or complaints in a timely manner regarding the use of their EPI. i) File claims within the periods established by the EPI issuer, unless the Law or other Regulations establish longer periods, in which case the longer period will always apply. j) In the event of being a victim of a security incident (cloning, identity theft, etc.) related to the EPI, file a claim with the issuer within the framework of what is stipulated in the ASFI Regulation for Customer and User Attention.

Article 27. (Rights). The holder and/or user has the right to:
a) Receive extensive explanatory information about the characteristics of the EPI and its secure use. b) Know the contract conditions for the use of the EPI before signing it. c) Be informed about the characteristics and conditions of prizes, promotions, or offers associated with the use of their EPI. d) Benefit from additional services associated with electronic payment instruments offered by the issuer.

CHAPTER VI
ATMs

Article 28. (Functionality). ATMs must allow, through the use of an EPI, to carry out one or more of the following operations:
a) Withdrawal of cash from an account. b) Inquiry of account movements and balances. c) Change of passwords. d) Payment of services.

//17. R.D. N° 126/2011 e) Transfer of funds between own accounts and to third-party accounts. f) Deposit of money into the account through the mechanism provided by the ATM itself, in which bills or a check are inserted. g) Loading of an EPI. h) Other operations with an EPI.

Article 29. (Characteristics, measurements, and security elements). ATMs of issuers must comply with what is established in the Regulation for the Operation of ATMs issued by the ASFI regarding the required characteristics of the premises where they are installed and their screen, lighting, and accessories; regarding the measures and security elements to safeguard their proper functioning and the security of the holder and/or user and others; and other provisions. The ASFI will conduct controls on issuers regarding compliance with these characteristics.

CHAPTER VII
SUPERVISORY AND OVERSIGHT AUTHORITIES

Article 30. (Surveillance). The BCB, through the Financial Entities Management, will carry out surveillance of operations carried out with authorized electronic payment instruments, their clearing, and settlement. In this framework, it may:
a) Approve the tariffs, commissions, and other charges applicable to the use of an EPI. b) Request the ASFI to review the contingency systems of EPI issuers, as well as special audits of issuers regarding the functioning of an EPI.
If, in the exercise of these duties, the BCB identifies indications of regulatory or operational non-compliance, it will communicate the fact to the supervisory body for the corresponding process.

Article 31. (Supervision). Within the framework of this regulation, the ASFI will issue specific regulations for the functioning and operation of electronic payment instruments authorized by the BCB.
I. The ASFI, at the time of granting authorization for the issuance of an EPI, will verify compliance with this Regulation and the specific regulations it issues. In this sense, it will define and supervise consumer defense policies, fraud prevention measures, and ensure that tariffs and/or commissions charged by issuers are

//18. R.D. N° 126/2011 available for consultation by holders and users, applying sanctions where appropriate.
II. The ASFI will design mechanisms so that, through the issuers, it supervises that accepting entities respect the terms of the EPI usage contract between holders, issuers, and what is established in the regulatory framework.

CHAPTER VIII
TRANSITIONAL PROVISIONS

First. (Adaptation period). Issuers of electronic payment instruments, as well as entities authorized by the BCB to carry out clearing and settlement of payment instruments, must adapt to what is determined in this Regulation within the period defined and communicated by the ASFI.

Second. (Operational security requirements). The Financial Entities Management of the BCB will establish the operational security requirements for each authorized EPI within a period of 90 (ninety) days from the date of approval of this Regulation.