Digital financial inclusion, digital payments under spotlight in Peru

Peru has followed in the footsteps of Ecuador by highlighting the costs associated with meeting demand for coins and paper notes and the benefits of digital payments.

During an international digital payment conference held in Peru on July 6-7 and organized by the country's banking association Asbanc, central bank official Milton Vega Bernal said keeping cash in circulation generates costs that are the equivalent of 1-1.5% of GDP.

Last month, Ecuadorian finance minister Carlos de la Torre said authorities in his country have had to bring in about US$2bn a year by plane to meet strong demand for dollar bills. The result, he said, was increased costs.

The Better than Cash Alliance, a global development partnership based at the UN, cites benefits of digital payments such as cost savings, transparency and financial inclusion. This, it says, can help lead to an increase of 0.3-0.8% in GDP.

And Peru, like Ecuador, is working to increase digital payments. Reducing costs is one reason, while increasing transparency and banking penetration are others.

During the conference, Vega, deputy manager of the central bank's payment system, said the idea was to have a hybrid system, "not to make cash disappear, that is utopian, but so that most payments are made digitally and, in that way, we reduce risk and increase the general efficiency of the economy."

He said that digital payments open the door for those that are not part of the financial system to join it and obtain other financial services, Asbanc said in a statement.

ASBANC

Giovanni Pichling, Asbanc operations manager, said the organization was committed to helping authorities with their push to embrace innovation and technology to makes people's lives easier.

Pichling cited the role being played by fintechs and, referring to IDB research, the changes they are bringing.

"Sixty percent of all fintech companies that operate in Latin America emerged between 2014 and 2016. This increase could reflect that, among entrepreneurs, there is a clear vision of the potential of the sector and of the opportunities to strengthen the banking industry in the country," said the Asbanc official.

GOVERNMENT POLICY

Fernando Veliz Fazzio, undersecretary of a cabinet digital transformation department, said the government was working on a new "digital government" policy for 2018-21.

"We expect to have a big contribution from the private sector. At the end of the day, this is going to involve everyone," Veliz said.