What are retail payment systems?

What are retail payment systems?

Wire Transfer Act 2020

Did you know that every day you are in contact with payment systems? Yes, they are those banking instruments and procedures used to transfer financial resources. Banco de México is the institution in charge of their proper functioning.

The characteristics of such instruments and procedures will depend on factors such as the amount and volume with which they operate, in addition to the operations they process and are divided into two groups.

One of the risks of these payment systems has to do with liquidity. That is, the person using them does not have sufficient funds to cover his transaction, so it is necessary to be sure that he has the capital to carry out any operation.

It is important to emphasize that the Central Bank will have the obligation to offer security in the operations, either eliminating or mitigating the risks that may arise, so that the users of these services have peace of mind when using them.

Example payment systems

There is a broad consensus that high-value payment systems should be settled on the same day, and the general practice is that payments should be settled as soon as possible. Originally, these systems were developed to settle financial markets, to settle obligations arising in other payment systems and for financial intermediaries to settle their obligations, so the average payment amount was very high. However, technological and financial advances have made it possible for financial intermediaries to offer the services of these systems to their clients for smaller payments.

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The Law for the Transparency and Regulation of Financial Services assists the Central Institute in this purpose by empowering it to regulate the services and means of payment provided by banks to their customers and the fees charged by banks to each other.

Transfer and payment system stp

It consists of instruments, procedures and rules for the transfer of funds between system participants. In a broad sense, the payment system is the infrastructure through which money is mobilized in an economy.

The LIP is composed of modules that allow the administration of system parameters, instruct funds transfers, grant and manage liquidity credits, make queries and access system reports.

All electronic operations in the LIP include the use of digital signatures as an authentication, integrity and non-repudiation mechanism. Digital signatures are data strings generated through mathematical methods that are attached to transactions to ensure their authenticity, as well as to protect the receiver from any rejection by the sender.

What are payment systems?

Payment systems are indispensable for the smooth functioning of modern economies. In particular, they allow the completion of financial transactions, the payment for goods and services of the real sector, and the implementation of the monetary policy of the Central Bank of Chile (BCCh). According to its international definition, a payment system consists of a series of instruments, procedures and rules for the transfer of funds between two or more participants and is made up of the system operator and its participants.

The Organic Constitutional Law of the Central Bank of Chile establishes as one of its mandates to ensure the normal functioning of payments. The Central Bank fulfills this mandate by acting as regulator of the payment systems and as operator of the Real Time Gross Settlement System (RTGS). In both roles, the objectives are to increase the security and efficiency of payment systems, considering the application of the minimum standards and requirements suggested by international organizations on this matter.

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