The New 3.0 Transfer System: A Brief Overview

The Argentine Central Bank (the “BCRA,” after its acronym in Spanish) issued a new Communique amending Argentina’s transfer system by incorporating newly amended and restated texts: “National Payments System – Transfers” (the “Amended and Restated Text”), “National Payments System - Transfers - Complementary Regulations” (the “Complementary Regulations”) and “Payment Service Providers Offering Payment Accounts”). 

While the first section of the Amended and Restated Text on “Batch Transfers” (formerly called “Transfers through the Chamber of Electronic Clearing”) was largely unchanged, the major new feature of the Program is found in Section 2 of the Amended and Restated Text and consists of a new system for “Immediate Transfers,” the operation of which is regulated in detail in the Complementary Regulations.

The new immediate transfer system aims to provide customers of both financial institutions and payment service providers (PSPs) offering payment accounts a transfer service that credits the amount instantly (within no more than 15 seconds), is available 24/7 throughout the year, and includes an open and universal digital payment ecosystem.

 

The new system’s central features are:

 

• • Interoperability: A Payment Standard Interface (PSI) is created with an open architecture that will enable integrations between all accounts (bank and virtual wallets).
  • Speed: Shops will receive automatic and irrevocable accreditation.
  • Competition: Because it is interoperable, it opens up competition for the provision of the service to retail and local businesses, allowing the latter to choose the provider who charges the lowest fees. Similarly, shop commissions will be capped at 8 per thousand.
  • Flexibility: It will work with ATM cards, QR codes, IDs, payment requests, and biometric data (e.g. fingerprint).

 

In addition, Compensadora Electrónica S.A., Interbanking S.A., Prisma Medios de Pago S.A. and Red Link S.A. will act as administrators of electronic fund transfers and will be in charge of establishing the operational, technical, and commercial rules applicable to payment schemes. It will be through these that the BCRA will supervise the system.

Participants in electronic fund transfer schemes (i.e. financial institutions, PSPs, clearing houses) will have to comply with the oversight mechanisms put forth by the BCRA for each type of participant, including real-time monitoring mechanisms.

Immediate transfer schemes will operate under the modality of deferred net settlement with real-time monitoring of guarantees to eliminate intraday credit risk.

For the authorization of each immediate transfer, sufficient funds for the guarantee must be verified in real time so that it is not possible for an originator entity to overdraw its guarantee (only financial institutions can do this).

 

Furthermore, the following aspects of the new system of immediate transfers are noteworthy:

 

(i) “Payment by transfer”

The BCRA has created a special immediate transfer modality called “Payment by Transfer” which applies when customers make payments in person or remotely. In turn, the Payment by Transfer has two coexisting modalities: initiated by the acceptor and payment request.

• • Initiation by the acceptor: Consists of a simplified model to facilitate the confirmation and conciliation of payments initiated by the acceptor by capturing the credentials of the ordering customers to form the payment instruction. The credentials for initiating a Payment by Transfer by an acceptor are: (i) cards associated with demand accounts or payment accounts for face-to-face capture (via magnetic stripe, integrated circuit or proximity) and (ii) PSIs for face-to-face or remote operations. In addition, the QR codes made available to customers by the acceptors (whether face-to-face or remote) must allow the ordering of Transfer Payments in accordance with the standards established for the PSI. All financial institutions and PSPs offering payment accounts must be able to authorize payment instructions received from third parties under the same conditions as those for a “Payment by Transfer” ordered through their own interfaces.

 

• • Payment request: Requires an ordering account identifier, which must then be followed by a process of confirmation and sending of the payment instruction which is resolved on the side by the financial institution or PSP to which that account belongs with the credentials defined by them. The payment request can be:

 

• • • Active: Issued by a potential recipient customer to a specific account identifier, such as a bank or virtual wallet’s account code, through the PSI. By accepting this payment request, the ordering customer sends a payment instruction to the provider of his or her ordering account with the amount and destination account information contained in the request, as well as the identifiers that allow it to be traced.

 

• • • Passive: Made available by an acceptor so that any potential ordering customer can consult it through the PSI, as described in section (ii). On the basis of the information obtained in the consultation, the ordering customer may send a payment instruction on the side of the ordering institution with the information on the amount and destination account obtained in the query, as well as the identifiers that allow it to be monitored. These passive payment requests must always have the option of being queried through a QR code governed by the standards defined by the BCRA. 

 

In both modalities acceptors must ensure that shops have a return tool for an immediate reverse transfer.

 

(ii) PSI

The new PSI will consist of a functional connection system that will make payments from all compatible accounts, whether they are bank accounts or virtual wallets, generating an open payment ecosystem that achieves transaction traceability. In this way, the QR code itself will allow for payments with transfers from any account, whether a bank or a PSP, to any other payment account, thereby achieving the highest levels of interoperability.

Under the regulation, the PSI has to establish the rules for interoperability, messaging and other procedures for the exchange of information, such as application programming interfaces (APIs), common to all immediate transfer schemes. Thus, the PSI has to define at least the following processes:

 

• • Standardized unique identification for each immediate transfer, including between multiple payment schemes.
  • Immediate transfer initiation with PSI credentials.
  • Payment request with transfer, both active and passive, including interaction with the QR code.
  • Information flows for the settlement and audit of the interchange fees set out in Sections 3 and 5 of the Complementary Regulations.
  • Active account consultation service.

 

The necessary definitions for the implementation of the PSI, including the stages for the gradual adoption of the ISO 20022 standard, will be specified within the framework of the Argentine Interbank Payments Commission (the “CIMPRA,” after its acronym in Spanish), with the participation of all the actors that the BCRA considers relevant; and will be implemented through the applicable regulatory instruments.

 

(iii) Adaptation and implementation deadlines

The new transfer system will enter into force on December 7, 2020. The provisions of this regulation will have to be implemented in phases. Phase 1 must be fully operational by December 7, 2020, and November 29, 2021 will be the deadline for the implementation of the remaining phases needed to achieve full compliance with these rules.