Digital payments are accelerated in Peru: they quintupled in 7 years

The pandemic of COVID-19 it marked a before and after in the progress of the digitization of payments in Peru. Thus, between 2015 and December 2022, the number of digital transactions increased fivefold, reaching around 174 operations per person in the year, according to the Central Reserve Bank of Peru (BCRP).

The monetary authority, in its report ‘CBDC: promoting digital payments in Peru’, indicates that last year’s data exceeded its forecasts made in 2019 on the progress of this form of transaction in Peru by 68%. This is due to innovations in retail payment methods through immediate transfers 24/7, digital wallets and payments with QR codes.

“Distancing measures and the generalization of contactless payments promoted the use of digital wallets and instant transfers by individuals and businesses, especially for low amount transactions”, comments the BCRP.

However, it stands out that, despite the considerable progress in the number of operations per capita, we are still below countries like Brazil, Costa Rica and Argentina, which reached 351, 235 and 186 digital payments per person in 2021, respectively.

Identified problems

According to the monetary authority, on the demand side, among the main problems facing the National Payment System (SNP) is the low level of acceptance of digital payments, as well as the preference for the anonymity of cash, the difficulties in fully understanding the technologies to accept this type of transaction and the high costs of cancellation services, etc.

While, on the supply side, they highlight the lack of interoperability; access barriers to current payment systems, schemes and agreements; difficulty in identifying profitable and inclusive business models; and limited access points.

In this section, he points out that, of the 18 existing banks nationwide, only 7 use digital wallets, 3 use Yape and 4 Plin. The same occurs with the 12 existing municipal funds: 6 use Yape and 3 Plin. Rural savings banks and financial institutions do not use any. This generates an interconnection ratio of 20% in the case of Yape and 15% in Plin.

a digital currency

The BCRP has completed the research stage for the creation of its currency called the Central Bank Digital Currency (CBDC).

The entity indicated that this phase will serve as the basis for the testing of assumptions, prototype, pilot and production stages.

During the study, he identified that financial inclusion and interoperability are the most limiting factors for development of the digital payments in Peru. Therefore, he concluded that there is a possibility that CBDC can make a significant contribution to solving these problems.

In a first stage, this currency will target the unbanked population, such as street vendors, transporters and construction workers.

Creating a digital currency will take time

The implementation of a cryptocurrency from the Central Bank is a process that can last years, and is a measure for the medium term, says Juan José Marthans, Academic Director of the Department of Economics at the University of Piura.

“I don’t think we’ll talk about the next 2 or 3 years. This must be done very seriously,” he says.

He adds that the regulatory and legal environment will play an important role in the BCRP’s effort, as well as the need to assess the impact of “this digital money on the creation of the monetary mass.”

Finally, he warns that an imbalance generated as a consequence of a derailment of this currency It would cause complications in the national economy.