The service would be available 24 hours a day, every day, and the funds would be available immediately, even if it involves transactions between different banks.

Traditionally, Panama has preferred cash payments. About 96% of transactions have been through this route, but the Covid-19 pandemic has led to growing consumer interest in digital payments.

Telered has been offering various services in this country for more than three decades, the best known Sistema Clave, an interbank network of ATMs, says Iván Marchosky, the company’s operations manager.

To consolidate its strategic commitment to efficient digitization, Telered is working on implementing a network of instant payments, through online banking. The service would be available 24 hours a day, every day, and the funds would be available immediately, even if it involves transactions between different banks.

Marchosky compares this infrastructure to a highway that will encourage the use of electronic media and, at the same time, will make it easier for Panamanians to become bank-based. The schedule expects banks to implement this service in the second quarter of the year..

How has the pandemic gone in the operation of the company in Panama?

The situation caught us all by surprise, we have been reinventing ourselves in the part of how services are offered. Telered is a 100% Panamanian company that provides services in the financial system, the best known is the Sistema Clave, which is almost 30 years old.

Through the 2,200 ATMs distributed around the Republic and the 56,000 points of sale installed in stores, more than 2 million users make purchases and withdrawals with Clave.

We must understand that Panamanians receive their salaries –the vast majority– through deposits to their accounts, and that they make use of these systems for purchases.

As many businesses are closed and contracts have been suspended, there has also been a decline in this regard. At the Sistema Clave level we saw a slowdown, but this is changing as the commercial sectors are opening up.

Apart from that, we have a payment ‘hub’ that interconnects bank customers with different companies so that they can pay obligations or recharge. We have seen this service increase during this time of pandemic. Another service we handle is the ACH, for interbank transfers. Although it is true that there was a decrease in the transactionality of payroll or wage, there has been an increase in the use of this service for transfer of payments and obligations.

What is the average amount of transactions handled per year? Has that been changing?

In 2019, 2.5 million Panamanians received transactions through ACH. That represented some 34 million transactions, and the total movement of approximately US $ 52,000 million, with a growth rate compared to the previous year of 27.7%.

From January to August 2020, 23.5 million transactions were moved, with an approximate value of US $ 31.9 billion, and from January to August 2019, US $ 33.9 billion were moved. The level of the number of transactions grew by 0.5%, measured from January to August 2019 vs 2020. Transactionality has been maintained despite the pandemic.

Does that reflect a stability of the system?

What is most reflected is that Panamanians are adopting electronic means to make their payments, their transfers.

There is a change in the use of cash and checks, they have had a very large decline. According to 2018 statistics, 96% of transactions in Panama are in cash. When we talk about transactions, we are even talking about micropayments, of transactions that Panamanians use, for example, to pay for the newspaper, to pay for a coffee.

Panamanians still have the habit of using cash, but increasingly, and perhaps accelerated by the pandemic, they are using electronic media more and more. Much is still needed and that is why Telered is modernizing the ACH system.

What does this modernization plan consist of?

Two years ago, along with the banks, we did an analysis of the ACH service that was being provided at that time. It is a bank transfer service that works during office hours and works through cuts, they are not immediate transactions.

When you generate an ACH in online banking, the bank gathers a group of transactions and sends them in batches to the central system that Telered manages, and then the company distributes them on a schedule. This distribution is made three times a day and usually an hour or two later that money will be available to the beneficiary. If a transfer is made on Sunday, then you have to wait until Monday for distribution.

We have adopted ISO 20022 messaging as part of a project to have instant payments. In July we completed our adaptation to be able to handle this new type of messaging. At this time, we are in the process of making banks, the ACH member financial institutions, of which there are 46, adopt this format, and they are doing it in a phased manner. This will allow us to have the platform ready in the first quarter of 2021 and the adoption of the service by financial institutions in the second quarter.

We work on the issue in conjunction with banks, in constant communication with the Superintendency of Banks, they know the route of our project; We also do it with the National Bank and its Real Time Gross Settlement System because we expect to have a real time transaction system in 2021, 24 hours a day, seven days a week..

The most important thing is that the transaction must be instantaneous. If I want to send it to a beneficiary of another bank, that transaction must arrive in seconds, and the added value is that the funds must be equally available.

For example, currently if you have an emergency on Sunday and you have to call a plumber you can pay him in cash or with a check, which is not so common, or with a bank transfer. If your bank is not the same as the plumber’s, that transaction he will receive the next business day during banking hours. The intention of this system is that this transaction is instantaneous, that it receives the funds and can make them available immediately, even if they do not use the same bank.

The bank will be able to offer new services based on this payment highway. This will encourage the use of electronic media, and mainly it will help to increase the banking system, because people will use this, even to make purchases with this type of facility.

ISO 20022 is an international standard, many ecosystems in the world are already using it, some 70 countries already have it. 80% of transactions worldwide and 87% of the value of transactions already use this type of messaging. For example, they use ecosystems as SEPA stands for the Single Euro Payments Area; even Zurich has among its plans to change its MT messaging to ISO 20022 by 2025; China, India, the United Kingdom, the United States, already have instant payments.

As it is a standard language that is being adopted by different ecosystems, ISO 20022 will allow us to interconnect in the future in much simpler ways. We have invested approximately US $ 2 million in modernization in the last three years.

With the implementation of the new ISO standards and instant payment, in addition to the reopening, what is the expectation for next year? Will we see transaction growth by 2021?

In the end, that the reopening can be maintained is a variable that the financial system does not control. If this continues, we expect that by mid-2021 at the latest we will reach the transactional levels we were in in 2019, but that will always depend on whether jobs are maintained. We are focusing on making our systems available to Panamanians and the government, commerce and banking systems to make life easier for them.

Are you optimistic about the future of these systems?

I think the world is changing. Just as our children are adopting new technologies and want things faster, instantaneity, these systems are looking for that, first instantaneity in the transaction, and that there is communication between different ecosystems.