6. Averías del motor MAK 9M 25
6.4. Escape con humo blanco
In most Latin American countries, access to credit has traditionally been a privilege enjoyed mainly by the relatively affluent section of the population. Without access to credit, many people chose not to have a banking relationship at all, so entry-level credit can play a role in drawing them into the banking system.
Where the low-income segment has gained access to credit, it has usually been from retailers, which often collect instalments at the customer’s door. The success of instalment credit in the retail sector provided one model for banks throughout the region to reach out to sub-
prime customers. Their usual approach has been to integrate instalment payments for individual purchases into conventional credit card products. There are three principal types of scheme:
● Issuer bears risk: The customer negoti-
ates with the issuer to negotiate instal- ment terms for a particular purchase, and the merchant receives full payment.
● Acquirer bears risk: The merchant offers
fixed instalments and receives monthly instalments, with the full amount guar- anteed by the acquiring bank.
● Merchant bears risk: The merchant
offers instalment options. The merchant gets monthly instalments when the cus- tomer pays.
Research has shown that in the sub-prime segment, monthly cash flow is the most important consideration, and that cus-
tomers consider banks to be overly bureau- cratic. Latin American banks have been act- ing in both areas. In Brazil, for example, a leading bank has simplified the application process for credit cards, in some cases requiring only proof of identity and address, and an income as low as one mini- mum wage. In Peru, banks have reached out to new customers with special outlets in shopping malls in low-income areas.
Banks have also been making better use of credit bureau information by focusing on the absence of negative reports, since few new applicants have a credit history. New products have also been developed that stabilise cash flow. For example, a leading bank in Mexico offers a credit card with instalment payments based on a fixed percentage of the credit limit rather than the outstanding balance.
Venezuela
million cards in force. These cards have limited use within the country since Venezuela does not yet have a fully operational system for the electronic clearance of retail payment instruments.
Smart cards and prepaid cards
No smart cards are currently issued in Venezuela. Prepaid cards are a fairly recent offering and are not yet broadly popular. Some banks offer prepaid e-cards that can be used to make purchases on the Internet, and some have also begun to offer electronic “vales” (vouchers). These replace the paper coupons and stamps used by some companies to provide fringe benefits to employees. These are used as money, but they are accepted only for the purchase of certain goods, such as basic goods or gasoline. These cards are not linked to a bank account, so can be used by anyone. It is expected that this type of product will introduce new users to the concept of plastic money, which will in turn increase trust in electronic payments systems and increase banking penetration. Single-purpose prepaid cards are also in wide use for mobile phones.
Direct credits and debits
Direct credits and debits are widely used in Venezuela, especially for large-value payments. The system is limited by the fact that there is no national interbank settlement system. Seven large banks have created a private network, which allows direct transfers among their account holders, but transfers outside of this system take 48 hours.
Strengths and opportunities
Banking sector officials give credit to the BCV, and its effective consultations with the industry, for the rapid implementation of a new electronic clearinghouse (CCE). The large banks were quick to make the necessary investments in new technology, and substantial infrastructure upgrades were implemented in just over one year. The use of parallel operations during the transition to the CCE has minimised risks of
disruption by providing time for training staff at all levels in the new procedures. Industry observers also credit some larger banks, most notably Banesco and BBVA Provincial, with helping smaller institutions through the transition by providing consultation services.
When it is fully implemented, the new CCE electronic system will generate considerable benefits for the economy and for the system’s users. Cheques will be cleared in 24 hours rather than the present 48 hours, which translates into reduced costs for financial institutions and the BCV. This, however, is likely to reduce incentives for using electronic payment products. Electronic processing will also reduce risk, since it reduces the size of the float, and it lessens the risk of human error. Another benefit is more effective control systems both for the BCV, which will have access to disaggregated data, and for financial institutions.
Lower processing costs should lead to lower fees charged to customers, which could translate into higher banking penetration, although the banks have not shown much interest in targeting the lower- income population, according to industry observers.
Banks will also benefit from a unified payments system that allows them to perform inter-bank operations in a quick and cost-effective manner, in turn enabling them to offer customers a wider array of products. For its part, the government will benefit from reduced costs for public transactions, such as the collection of taxes and payment of social security benefits.
Improvements in interbank communications are still in the implementation process and it is too soon to assess the outcome. Nonetheless, observers throughout Venezuela’s financial sector say that the unprecedented process of consultation and planning that began in 1998 has created the momentum needed to continue the modernisation of the country’s payments systems.
Venezuela
usage is a tax deduction of 4% of the transaction that goes to the government to cover merchant taxes. If the merchant is entitled to a refund at the end of the year, this is paid as a credit against the following year’s taxes rather than as a cash refund. This deduction applies only to credit cards.
The biggest obstacle to the efficient operation of the financial sector is the lack of an RTGS system. The current SWIFT private network is a product of the BCV’s tradition of ad hoc solutions, and it imposes both delays and risks on its participants. The creation of a real-time system, combined with a clear distinction between large and small-value payments, will greatly benefit all financial institutions in the country.
Outlook
The Venezuelan banking industry plans to take advantage of the new CCE electronic clearinghouse to introduce new and expanded services in the near future. The most important will be an expansion of the existing system of direct debits, which is currently available only to large-volume customers and only through certain banks. This has inhibited debit card
penetration and banking industry officials say that this will be addressed through reforms to the
Domiciliación system, which will be integrated into the CCE, along with other forms of electronic payment. The first step will be electronic payroll transfers, which are expected to be available by the end of 2005. This reform could lead to substantial increases in banking penetration and the velocity of payments.
Debit and credit cards are expected gradually to gain wider acceptance as banks pass on cost savings to customers and are able to offer more services. In addition, it is expected that banks will focus on launching campaigns that emphasise the safety of using plastic products. The banks are also exploring the possibility of launching meal voucher cards.
The banks also plan eventually to implement cheque imaging based on the US Check 21 system. This will require changes to banking rules to give the cheque image the same legal status as the original, as has already been done in some other Latin American countries. In addition to speeding up processing, this innovation would provide greater security through faster detection of fraudulent actions.
T
he electronic payments systems in place in the larger Latin American markets have seen major reforms since the late 1990s, and in most cases their performance is close to those found indeveloping countries. RTGS systems have been implemented in all of the payments systems assessed in this white paper (with the exception of
Venezuela’s), thereby substantially lowering systemic risk. Paper-based cheque clearinghouses have given way to electronic systems, and new image-based electronic systems are now being developed to enable cheque truncation, in some cases at the merchant level. New high-value clearinghouses, combined with modern communications protocols, have enabled rapid low-risk transactions between larger businesses, speeding the pace of commerce and driving economic growth. In addition, revamped low-value
clearinghouses have adapted to accommodate emerging payment products such as direct credits and debits, and increased financial system efficiency has helped banks to introduce new debit and credit card products.