The Covid-19 pandemic marked a turning point in Peru’s ongoing digitization of payments.
As a result, the number of digital transactions increased fivefold between 2015 and December 2022, reaching about 174 per person per year, according to the Central Bank of Peru (BCRP).
The monetary authority points out in its report “CBDC: Promoting digital payments in Peru” that last year’s data exceeded its 2019 projections for developing this form of transaction in Peru by 68%.
This is due to innovations in retail payment methods through 24/7 instant transfers, digital wallets, and payments with QR codes.
“Distancing measures and the generalization of contactless payments boosted the use of digital wallets and instant transfers by individuals and businesses, especially for small-value transactions,” comments the BCRP.
However, they noted that despite significant progress in the number of transactions per capita, Peru still lags behind Brazil, Costa Rica, and Argentina, which reached 351, 235, and 186 digital payments per person, respectively, in 2021.
According to the Monetary Authority, on the demand side, the main problems of the National Payment System (SNP) are the low acceptance of digital payments, the preference for the anonymity of cash, the difficulties in understanding the technologies for this type of transactions and the high cost of cancellation services, etc.
On the supply side, it is the lack of interoperability, the barriers to accessing existing payment systems, schemes, and arrangements, the difficulty in finding viable and inclusive business models, and the limited access opportunities.
This section notes that of the 18 banks nationwide, only seven use digital wallets, three Yape and four Plin.
The same applies to the 12 municipal savings banks: 6 use Yape, and three use Plin.
Rural banks and financial institutions use none.
This results in a networking rate of 20% for Yape and 15% for Plin.
DIGITAL CURRENCY
BCRP has completed the research phase to create its currency, the Central Bank Digital Currency (CBDC).
According to the company, this phase will be the basis for testing assumptions, prototyping, piloting, and production.
The study identified financial inclusion and interoperability as the main obstacles to the development of digital payments in Peru.
It, therefore, concluded that CBDC has the potential to significantly contribute to solving these problems.
In the initial phase, this currency will target the unbanked population, such as street vendors, transporters, and construction workers.
CREATING A DIGITAL CURRENCY WILL TAKE TIME
According to Juan José Marthans, academic director of the Faculty of Economics at the University of Piura, the introduction of a cryptocurrency by the central bank can take years and is a medium-term measure.
“I don’t think we are talking about the next two or three years. This needs to be addressed very seriously,” he says.
He adds that the regulatory and legal environment will play an important role in the BCRP’s efforts, as will the need to assess the impact of this digital money on the creation of “the money supply.
Finally, he warns that any imbalance created by derailing this currency would lead to complications in the national economy.