Resolution JPRM-2024-018-M: Regulation of Payment Means and Systems in Ecuador and Fintech Activities

THE MONETARY POLICY AND REGULATION BOARD

CONSIDERING:

That, Article 226 of the Constitution of the Republic of Ecuador prescribes that public servants and persons acting under a state authority shall exercise only the competencies and powers attributed to them in the Constitution and the Law;

That, Article 227 ibid states that Public Administration constitutes a service to the community governed by principles of efficiency, quality, hierarchy, coordination, planning, among others;

That, numeral 1 of Article 302 of the Magna Carta provides that monetary, credit, exchange, and financial policies, among others, have as objectives to supply the necessary payment means for the economic system to operate efficiently;

That, the first clause of Article 303 ut supra determines that the formulation of monetary, credit, exchange, and financial policies is the exclusive faculty of the Executive Function and will be implemented through the Central Bank of Ecuador;

That, Article 36 numeral 13 of the Organic Monetary and Financial Code states that the Central Bank of Ecuador is in charge of "(…) exercising control over payment means; and, the surveillance and supervision of auxiliary payment systems, promoting efficiency, interoperability, and innovations in this field (…)";

That, Article 40 of the Organic Monetary and Financial Code states: "(…) Entities of the national financial system and those qualified within auxiliary payment systems will participate in the collection of public resources, through collector accounts in the name of non-financial public entities, in accordance with the regulations issued by the Monetary Policy and Regulation Board. The balance of said accounts will be transferred to the accounts corresponding to the respective public institution at the Central Bank of Ecuador, in accordance with the regulation issued for this effect (…)";

That, Article 47.1 of the aforementioned Organic Code created the Monetary Policy and Regulation Board as part of the Executive Function, responsible for the formulation of monetary policy, the highest governing body of the Central Bank of Ecuador, and determines its composition;

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That, Article 47.6 of the same Code, regarding the functions of the Monetary Policy and Regulation Board, among others, establishes: "1. Formulate policy in the monetary field and observe its application by the Central Bank of Ecuador, to preserve the integrity and sustainability of the dollarization monetary system and the financial system, in accordance with the provisions of this Code; (…) 12. Regulate the central payment system, as well as the regulation, permission, registration, surveillance, and supervision of auxiliary payment systems; (…) 25. Set the commissions and tariffs for services of the Central Bank of Ecuador; and, 26. Those others conferred by law (…)";

That, Article 47.7 of the aforementioned Code states: "Acts of the Monetary Policy and Regulation Board enjoy the presumption of legality and will be expressed through resolutions that will have mandatory force (…)";

That, Article 99 of the aforementioned Code determines: "Payment means are checks, electronic wallets, and electronic payment means comprising transfers for payment or collection, credit, debit, prepaid, reloadable or non-reloadable cards, deposit reserve and deposit insurance; electronic wallets with the category of entirely digital banking that meet the liquidity reserves, reserve, and deposit insurance requirements, and other technology-centered payment means, subject to a license from the Superintendency of Banks and in the terms determined and regulated by the Monetary Policy and Regulation Board";

That, Article 101 of the same Code states: "Electronic payment means will be implemented and operated by the Central Bank of Ecuador and operated by entities of the national financial system and duly qualified agents of the auxiliary payment system in accordance with the regulations issued by the Monetary Policy and Regulation Board in accordance with international standards on the regulation of electronic payment means. All transactions carried out with electronic payment means operated by those performing Fintech Activities will be settled and, if applicable, cleared at the Central Bank of Ecuador, in accordance with the procedures established by the Monetary Policy and Regulation Board. The use of electronic, telematic, or similar payment means, implemented by the national financial system, will be encouraged, tending to reduce costs for these and other services provided by said entities. All transactions carried out with electronic payment means will be settled and, if applicable, cleared at the Central Bank of Ecuador, in accordance with the procedures established by the Monetary Policy and Regulation Board";

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That, the first and second clauses of Article 103 of the aforementioned norm state: "The national payment system comprises the set of policies, norms, instruments, procedures, and services through which resource transfers managed through payment means and the settlement of values between its various participants are effected, directly or indirectly. The national payment system is integrated by the central payment system and the auxiliary payment systems. The Central Bank of Ecuador will establish the requirements for authorization, operation, registration, and information disclosure of these systems. The corresponding tariff regime will be regulated by the Monetary Policy and Regulation Board (…)";

That, Article 104 of the aforementioned Code states: "The central payment system is the set of policies, norms, instruments, procedures, and services articulated and coordinated, in charge of the Central Bank of Ecuador, through which resource transfers from its participants are effected, as well as their compensation and settlement. The Monetary Policy and Regulation Board will establish the requirements and conditions for access to the central payment system";

That, Article 105 of the aforementioned Code provides: "Auxiliary payment systems are the set of policies, norms, instruments, procedures, and services articulated and coordinated, public or private, authorized by the Central Bank of Ecuador, established to effect resource transfers, money remittances, or compensation between their various participants";

That, the first clause of Article 108 ut supra establishes: "The Central Bank of Ecuador is the compensator and settler of resources in the central payment system and settler of resources in auxiliary payment systems. These auxiliary systems, as well as entities of the national financial system, will remit with the periodicity and in the form determined by the Monetary Policy and Regulation Board the details and results of the compensation processes to be settled (…)";

That, Article 109 of the aforementioned Organic Code determines: "The Central Bank of Ecuador will carry out the surveillance and supervision of auxiliary payment systems and their administrative entities, as well as any payment infrastructure or monetary resource transfer infrastructure acting in the market, to ensure the correct functioning of the channels, instruments, and payment means processed through them. The Monetary Policy and Regulation Board will adopt regulations to determine the operation, governance, risk control, and financial requirements that auxiliary payment systems and their administrative agencies must comply with. Administrators of auxiliary payment systems, including any payment infrastructure or monetary resource transfer infrastructure, for their operation must have authorization from the Central Bank of Ecuador, and will be obligated to remit the information this requires and within the deadlines determined (…)";

That, numerals four and five of Article 162 of the aforementioned norm establish:
"The private financial sector is composed of the following entities: (…)
4. Technological financial services entities: These are entities that develop financial activities centered on digital and electronic technology or that carry out activities representing financial risk as determined by the Financial Policy and Regulation Board; unless they have a relationship with the payment system, whose regulation corresponds to the Monetary Policy and Regulation Board and whose control corresponds to the Central Bank.
5. Specialized societies for deposits and electronic payments: These are entities whose sole object is the receipt of resources for the exclusive purpose of facilitating payments and transfers of resources through authorized electronic payment means; and, sending and receiving financial transfers in accordance with the regulation issued by the Monetary Policy and Regulation Board. The requirements for their constitution will be regulated by the Financial Policy and Regulation Board, controlled by the Central Bank of Ecuador, who will be in charge of issuing the corresponding information in case of requiring supervision or sanction intervention by the Superintendency of Companies, Securities, and Insurance with the Superintendency of Banks, Superintendency of Popular and Solidarity Economy, as appropriate, and who will be in charge of proceeding as the Law disposes. All provisions corresponding to technological financial services entities will apply to specialized societies for deposits and electronic payments";

That, numeral two of Article 439.1 of the aforementioned Code establishes: "Technological financial services entities are companies that develop financial activities centered on technology, among which are the following:

1. Digital credit granting: Companies that offer credit products through electronic platforms, without this implying the collection of public resources for intermediation purposes.
2. Neobanks: These are financial entities dedicated to offering banking intermediation services digitally in accordance with new technological advances.

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They must comply with all regulations and provisions corresponding to traditional banking activity (…)";

That, Article 5 of the Organic Law for the Development, Regulation, and Control of Technological Financial Services (Fintech Law) establishes: "For the purposes of this Law, it will be understood that Fintech Activities imply the development, provision, use, or offer of:
i) Technological infrastructures to channel payment means; ii) Technological financial services; iii) Specialized societies for deposits and electronic payments; iv) Technological services of the securities market; and, v) Technological services of insurance";

That, Article 7 of the aforementioned Law determines: "To exercise Fintech Activities in Ecuador, companies must comply with the following requirements:
7.1. Be duly constituted as national companies, or be authorized as branches of foreign companies in Ecuador. Additionally, authorization will be required for the provision of any of the Fintech Activities established in this Law, by the Superintendency of Banks, the Superintendency of Popular and Solidarity Economy, the Superintendency of Companies, Securities, and Insurance, or the Central Bank of Ecuador, as appropriate.
7.2. The corporate object of said national companies, or branches of foreign companies, will be specific and exclusive for the performance of Fintech Activities and may not contain activities distinct from them";

That, Article 8 of the aforementioned Law states: "Fintech companies will be regulated by the Monetary Policy and Regulation Board and the Financial Policy and Regulation Board, as appropriate; and supervised and controlled by the Central Bank of Ecuador, the Superintendency of Companies, Securities, and Insurance, the Superintendency of Banks, or the Superintendency of Popular and Solidarity Economy, within the scope of their competencies and according to the regulation issued for this effect";

That, Resolution No. JPRM-2023-014-M, of August 7, 2023, which contains the "Norm that regulates currency, payment means and systems in Ecuador and the fintech activities of its participants", regulates the provisions of electronic payment means and participants of the auxiliary payment system, among others, currency exchange, fractional currency, and electronic payment means;

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That, it is necessary to issue a comprehensive reform for the issuance of a norm that allows the application of the Organic Law for the Development, Regulation, and Control of Technological Financial Services (Fintech Law);

That, the Monetary Policy and Regulation Board, through ordinary session No. 009-2024, under mixed modality, on September 4, 2024, reviewed the proposal sent via memorandum No. BCE-BCE-2024-0189-M, of September 2, 2024, by the General Manager of the Central Bank of Ecuador to the President of the Monetary Policy and Regulation Board, as well as the technical report No. BCE-GSIMP-2024-008, of September 2, 2024, and the legal report No. BCE-GJ-011-2024, of September 2, 2024; and,

In exercise of its functions and in attention to Article 47.7 of the Organic Monetary and Financial Code, the Monetary Policy and Regulation Board resolves to issue:

NORM THAT REGULATES PAYMENT MEANS AND SYSTEMS IN ECUADOR AND FINTECH ACTIVITIES OF ITS PARTICIPANTS

TITLE I.- OF PAYMENT MEANS
CHAPTER 1.- PRELIMINARY CONSIDERATIONS
Article 1.- Payment Means: These are physical or electronic instruments authorized by the Monetary Policy and Regulation Board that, used among different economic agents, serve to carry out financial or economic transactions, for the purpose of, among others, acquiring goods, services, or canceling obligations.
Payment means are classified into:
a. Physical payment means; b. Electronic payment means; and,
c. Electronic Wallets.

CHAPTER 2.- PHYSICAL PAYMENT MEANS
SECTION I.- DETERMINATION:
Article 2.- Physical Payment Means: Physical payment means are banknotes, coins, and checks.

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SECTION II.- FRACTIONAL CURRENCY EXCHANGE:
Article 3.- Scope of application: The provisions contained in this section are applicable to public banking with deposit-taking capacity, private banks, mutual savings and credit associations for housing, and savings and credit cooperatives, who for the purposes of this section will be referred to as "financial entities"; as well as, for the Central Bank of Ecuador within the scope of its attributions and competencies.
Article 4.- Currency Exchange: The Central Bank of Ecuador and financial entities will exchange at their counters, banknotes for fractional coins and vice versa, with the aim of satisfying the demand of the citizenry.
The citizenry will receive in fractional coins an amount equal to that delivered to be exchanged. Financial entities will carry out the exchange during their usual hours of public attention, without discriminating whether or not it is a client or member of the entity. To carry out exchange activities and satisfy demand, financial entities will maintain in their cash registers coins of various denominations in sufficient quantities. The exchange and distribution of fractional currency will be carried out in accordance with the needs of the citizenry. Exceptionally, in case they do not have coins in the required denominations, the Central Bank of Ecuador and financial entities may deliver coins in the denominations closest to those requested. The Central Bank of Ecuador may request information from participants of the National Payment System regarding the characteristics of the demand for currency in circulation.

CHAPTER 3.- ELECTRONIC PAYMENT MEANS
SECTION I.- DETERMINATION:
Article 5.- Electronic Payment Means: The following are electronic payment means:
a. Electronic money transfers to effect payments; b. Electronic money transfers to effect collections;
c. Credit cards;
d. Debit cards; and, e. Prepaid, reloadable or non-reloadable cards.

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SECTION II.- OPERATION:
Article 6.- Operation: Electronic payment means will be operated by the Central Bank of Ecuador and by participants of the Auxiliary Payment System, in accordance with the authorization granted by the Central Bank of Ecuador.
Article 7.- Validity: Payments made through electronic means cannot be repudiated, revoked, or left without effect. A payment is considered valid when the system operator, once the payment instruction has been received, has proceeded to communicate to participating entities to proceed with its validation and confirmation.
Article 8.- Compensation and Settlement: All transactions carried out with electronic payment means will be settled and, if applicable, cleared at the Central Bank of Ecuador.
The net results of the compensation processes will be settled at the Central Bank of Ecuador, through debits or credits to the accounts that participants of the Central Payment System maintain at said institution. The Central Bank of Ecuador will establish the conditions for the settlement of transactions carried out through the Central Payment System and the Auxiliary Payment System.

CHAPTER 4.- ELECTRONIC WALLETS
Article 9.- Concept: An electronic wallet is a payment means that, through a technological application or online service, on an electronic device, allows its users to make payments, collections, transfers, send and receive financial transfers and remittances, in real time.
Article 10.- Operation: Electronic wallets may be operated exclusively by:

1. Specialized societies for deposits and electronic payments (SEDPES);
2. By financial entities exclusively for transactions of their clients or members; and,
3. By entities of auxiliary services of the financial system with authorization to provide the service of processing electronic payment means.
   Electronic wallets may operate with the electronic payment means expressly authorized by the Central Bank of Ecuador.
   Article 11.- Availability: The funds of electronic wallet holders credited in their respective electronic payment accounts will be available at all times and immediately, at the sole request of their holder. To this effect, the systems implemented by participants operating electronic wallets must identify and individualize the

_______________________________ funds and each user movement, as well as guarantee their operation and availability 24 hours a day, 7 days a week, 365 days a year.
Article 12.- Maximum operation amounts: Participants of the Auxiliary Payment System that provide the electronic wallet service, on their own account or on behalf of third parties, must allow users to customize their maximum operation amounts, which will not exceed those established by the Central Bank of Ecuador.
Participants may define maximum operation amounts lower than those determined by the Central Bank of Ecuador, and must establish controls and due diligence policies related to the frequency of daily payments.
Article 13.- Security standards: Participants of the Auxiliary Payment System that provide the electronic wallet service must inform and warn their clients and users regarding transactional security measures aimed at mitigating fraud and identifying suspicious patterns; as well as, establish channels for the resolution of claims related to these events.
Electronic wallet services must be offered securely, guaranteeing the privacy and security of information.

CHAPTER 5.- CONTROL AND STATISTICS OF PAYMENT MEANS
Article 14.- Control: The Central Bank of Ecuador will carry out control of payment means, through statistical and transactional monitoring, safeguarding that unauthorized payment means by the Monetary Policy and Regulation Board are not used in the country.
Article 15.- Publication of statistics: The Central Bank of Ecuador will publish quarterly on the institutional website, statistics on the use of payment means operating in the country.
Article 16.- Obligation to send information: Entities that operate or process payment means must remit the information required by the Central Bank of Ecuador in the form and periodicity determined by it.

TITLE II.- NATIONAL PAYMENT SYSTEM
Article 17.- National Payment System: The National Payment System comprises the set of policies, norms, instruments, procedures, and services through which resource transfers managed through payment means and the settlement of values between its various participants are effected, directly or indirectly.
The National Payment System is integrated by the Central Payment System and the Auxiliary Payment System.
The Central Bank of Ecuador will establish the requirements for authorization, operation, registration, and disclosure of these systems.
Article 18.- Principles: The National Payment System will be governed by principles of security, efficiency, transparency, stability, risk control, and interoperability.

CHAPTER 1.- CENTRAL PAYMENT SYSTEM
Article 19.- Central Payment System: The Central Payment System is the set of policies, norms, instruments, procedures, and services articulated and coordinated, in charge of the Central Bank of Ecuador, through which resource transfers from its participants are effected, as well as their compensation and settlement, is integrated by:
a. Interbank Payment System; b. Interbank Collection System;
c. Check Clearing House;
d. Specialized Clearing Houses; and, e. Online Payment System.

CHAPTER 2.- AUXILIARY PAYMENT SYSTEM
SECTION I.- PRELIMINARY CONSIDERATIONS
Article 20.- Auxiliary Payment System: It is the set of policies, norms, instruments, infrastructures, technologies, proced

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