Friday 29 May, 2020

BOJ issues new payments services guidelines

The Bank of Jamaica has withdrawn – with immediate effect - the Guidelines for Electronic Retail Payment Services.

The Bank of Jamaica has withdrawn – with immediate effect - the Guidelines for Electronic Retail Payment Services.

The Bank of Jamaica (BOJ) has issued new regulations under what it described as “a Fintech Regulatory Sandbox” to encourage innovations in financial services.

The guidelines are also aimed at promoting competition and financial inclusion, the bank indicated in a release on Monday.

Analysts had proposed the sandbox regulatory environment to facilitate the development of payments solutions based on blockchain and other fintech transactional solutions.

Arising from the change, all existing payments services providers will have to reapply for licensing.

The BOJ said the new regime will allow regulated entities and fintech companies, in partnership with deposit-taking institutions (DTIs) who want to deliver payment services or related financial services, to operate within the regulations outlined.

Regulated entities are institutions regulated by the central bank under the Banking Services Act (BSA) and the Bank of Jamaica Act and the Financial Services Commission (FSC) under the Securities Act.

The FSC grants approval to its licensees to engage in fintech activities.

The BOJ noted that the operation of the sandbox will be guided by the Fintech Regulatory Sandbox Guidelines, which were developed in accordance with Section 28 of the Payment, Clearing and Settlement Act of 2010 (PCSA, 2010).

“Participants in the sandbox will be permitted to test innovative financial products, services and businesses in a live market environment, while ensuring appropriate safeguards are in place to manage risks, including the risk of product failure and the risk of jeopardising the integrity and stability of the financial system,” BOJ said.

On Monday, the central bank advised the public that it had withdrawn - with immediate effect - the Guidelines for Electronic Retail Payment Services (ERPS 2) previously issued by the bank for the operation of electronic retail payment services.

Going forward, it said, authorization to operate these services will only be granted to eligible applicants under the Fintech Regulatory Sandbox Guidelines, which take effect on March 16.

The BOJ said payment services providers which previously received authorization under ERPS 2 should contact the Bank at fintech-sandbox@boj.org.jm for information related to the effect these changes may cause to their operations.

The central bank noted in its listing of regulatory guidelines that participants in the sandbox will be permitted to test innovative financial products, services and businesses in a live market environment, while ensuring appropriate safeguards are in place to manage risks, including the risk of product failure and the risk of jeopardising the integrity and stability of the financial system.

It stated: “The sandbox will provide participants with a controlled environment for the deployment of financial technology.”

It outlined that it is expected that this Regulatory Sandbox will reduce the time, and potentially the costs incurred by participants in getting innovative products to market.

 

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