Payment Cards Market Faces Urgent Need for Solutions Amid Shift to Fast Payments

Introduction

The payment cards market is at a critical juncture as it navigates the impact of changing regulations and the rise of fast or instant payments. The introduction of new acquirers and issuers of prepaid cards has brought increased competition and alternatives for individuals and merchants, while digital payment instruments have seen a significant surge.

Challenges Ahead

• Increased competition and alternatives from new acquirers and issuers of prepaid cards
• Growing importance of digital payments in the economy
• Need to improve standards for clearing and settlement transactions
• Regulation must set minimum standards that guarantee the adequate functioning of financial services when facing operational and cyber risks

Convergence to International Standards

The Central Bank has a broad interest in the stability of the overall financial system, ensuring the normal functioning of internal and external payments, and its role as lender of last resort. To achieve this, it is essential to converge to international standards in regulation and implement new macro-prudential tools.

• The BCCh has made significant progress in implementing Basel III standards, which are expected to be fully converged by 2024.
• The Countercyclical Capital Requirement (CCyB) is a key macroprudential policy tool aimed at increasing banks’ resilience in the face of severe stress scenarios.

Looking Ahead

As the financial sector continues to evolve, it is crucial to advance coordination processes between the Central Bank, the Financial Market Commission, and the Financial Stability Council. This will enable the implementation of new tools within a framework of macroprudential regulation that follows international guidelines.

• The BCCh also looks forward to learning from other jurisdictions’ experiences in implementing Basel standards and improving its own work on impact evaluation and continuous assessment of the reforms.
• The payment cards market will need to address pending issues related to strengthening the local financial safety net through the development of a financial resolution framework and implementation of Emergency Liquidity Assistance.

Conclusion

The payment cards market is facing a critical juncture, and it is essential to improve standards for clearing and settlement transactions. Convergence to international standards, advancing coordination processes, and addressing pending issues will be crucial in shaping the future of the payment cards market.