Payment System

What is a Payment System?

The Payment System (PS) is a set of instruments, procedures and methods related to the settlement of transactions through the transfer of funds that guarantee cash circulation among participants in the banking and financial system, along with other participating organizations.

In Argentina, the payment system is structured through the Electronic Means of Payment (in Spanish, “MEP”) and managed by the BCRA. Monetary policy and call money market transactions are channeled through the MEP.

Objectives:

• Reducing bank/financial fees
• Improving the security, speed, and accuracy of payments and settlement of transactions
• Encouraging economic flow among institutions
• Improving payments clearing supervision by the Central Bank

MEP participants:

• Banks
• Private Automated Clearing Houses (in Spanish, “CECs”): low-value automated clearing houses, high-value automated clearing houses and settlement terms.
• Exchange Houses
• • Other organizations such as the Buenos Aires Stock Exchange (in Spanish, “MERVAL”), the National Social Security Administration (in Spanish, “ANSES”) and the Argentine Post Office.

How it works:

Financial institutions and other licensed entities hold current accounts with the MEP to make transactions with participants in the system. The MEP is responsible for settling net balances over the operating cycle.

While the BCRA has access to on-line interbank transfers through the MEP, automated clearing houses primarily process checks, transfers, direct debits, and any balance resulting from ATM networks and credit cards. In turn, the operation scheme of ATM networks enables their members to settle the balance of their transactions through low-value automated clearing houses.

Clearing houses settle payments under the MEP system through the current accounts they hold with the BCRA. Thus, participants’ transactions made by via MEP are settled through clearing houses. A bank with a debit balance transfers funds to the accounts of a clearing house which, in turn, transfers them to a bank with a net credit position.

Instruments

Instruments that may be cleared:

• Checks
• Settlement checks (cannot be cleared)
• Direct Debits
• Transfers
• Credit Invoice
• Time Deposit Certificate
• Bank Drafts and Transfers (money orders and wire transfers)
• Sight drafts drawn against sight accounts opened with cooperative credit unions
• Time drafts drawn against sight accounts opened with cooperative credit unions
• Official Bearer Payment Order (in Spanish, “OPON”)

The BCRA is also a party to two regional agreements entered into with other Central Banks, whereby two cross-border payment systems have been developed: ALADI (Latin American Integration ssociation)(See list of institutions authorized to execute the ALADI Agreement) and Local Currency Payment System (in Spanish, “SML”) and Local Currency Payment System (in Spanish, “SML”).