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Chronology of main changes in Mexico's payment systems

1994

1. The Reform

The government had privatized banks and Banco de México had eliminated the reserve requirement known as “encaje legal”. At the same time, financial transactions had become more complicated and the amounts involved had increased. All this gave rise to a financial environment in which payment systems generated risks which threatened to destabilize the financial system. In order to address this situation, Banco de México began to overhaul the country’s payment system to make it safer and more efficient.

  • The first task was to determine the risk exposure of different payment system participants, evaluate whether the risks were appropriately distributed among parties, and use the most recent information technology to reduce them. Once that was accomplished, the following reform guidelines were established.
  • Reduce inherent risks to payment systems and distribute them evenly among participants.
  • Cover all relevant systems.
  • Ensure a balance between reducing the risks generated by the operation of the payment systems and their impact on financial market efficiency.

More specifically, the following projects were set up to implement the reform:

  • Design and develop a large-value payments system that enables participants to send payment orders with instructions to credit the corresponding amount to third party accounts the same day.
  • Promote the Interbank Payment System (pioneer of TEF) developed by the Bank Computer Center (Cecoban), which enabled participants to make programmed payments that were credited to the accounts of beneficiaries at other banks between date t+1 and t+4.
  • Establish daily overdraft limits on the current accounts of commercial banks with Banco de México.
  • Eliminate rules allowing same-day settlement of checks presented to the clearing house.
  • Establish the practice of delivery-versus-payment for government securities transactions.
  • Modify the national payment system in US dollars so that Banco de México would no longer have to provide credit for settling US dollar-denominated checks.

2. Interbank payment

Cecoban began to run the Interbank Payment system.

1995

1. Single account

It was established that commercial banks could only overdraw on their accounts with the Account Holders Service System (SIAC, for its acronym in Spanish) by an amount equal to the value of the collateral given to Banco de México. However, some overdrafts above the value of the guarantees were allowed, on which interest had to be paid for every minute the account was overdrawn by more than the amount covered by the collateral.

2. Large value payments

In March, the Extended Use Electronic Payments System (SPEUA, for its acronym in Spanish) began operating, which processed payment orders with instructions to credit third party accounts in real time. When the system was first introduced there was a lower limit of MXN$500,000 on the transaction amount as well as a limit on the risk each bank could take when granting credit to other banks. 

1996

1. Document clearing houses

As of January, Banco de México changed the settlement of overnight checks to the bank working day following the day on which they were presented for clearing (t+1).

In November, the company Cecoban, S.A. de C.V. was created. It replaced Fideicomiso Cecoban, an entity run by Banco de México. Cecoban’s main activities that year were: the settlement of local currency-denominated documents for Mexico City, Monterrey and Guadalajara using electronic, traditional and automated media, and the Interbank Payment operation.

2. Single account regime

The single account regime was modified in October. It was decided that the overdraft limit would be the lowest of: a) one third of the sum of the risk exposure limit determined by the SPEUA-participating institution with respect to other institutions, or b) MXN$3,000 million.

3. SPEUA

As of June, the minimum amount for payment orders was reduced to MXN$100,000.00.

4. Securities Transaction Settlement

In June, the Interactive Securities Deposit System (SIDV, for its acronym in Spanish) began offering settlement services for bank securities, certificates of ordinary participation guaranteed by Nacional Financiera S.N.C., and government securities under the delivery-versus-payment scheme.

1997

1. Federal checks

As of April, federal checks and other documents charged to the Treasury’s current account with Banco de México were no longer released.

2. SPEUA

In August, the minimum amount for payment orders through SPEUA was lowered to MXN$50,000.

1998

1. Clearance and fund transfer

It was established that the local currency accounts of banks with Banco de México would only accept overdrafts covered by collateral during the clearing house document settlement process. In order to keep settlement processes robust, Banco de México developed the Clearing House Settlement System (SICAM, for its acronym in Spanish), as a SIAC module. SICAM clears documents, allows banks to grant each other credit lines to settle cleared balances, and determines how the lines are exercised.

2. SPEUA

As of December, the formula for calculating the maximum amount of the sum of all risk exposure limits determined by an institution with respect to others in SPEUA was indexed to inflation.

3. Clearance of US dollar-denominated checks and payment orders

As of March, the clearance of US dollar-denominated checks and payment orders is done using procedures and mechanisms determined freely by banks. US dollar- fund transfer orders for settling clearance take place abroad or in accounts that banks open for such purpose with a foreign bank interested in providing the service without Banco de México’s intervention.

2000

1. New payment systems

Banco de México decided to create a new large-value payments system to replace SPEUA. The central bank consulted with banks to ensure the new system included all the required information. The new system is designed to facilitate payment automation for banks.

2001

1. Basic principles

Banco de México actively participated in the working group comprising several central banks and international organizations promoted by the Bank for International Settlements, which established the "Core principles for systemically important payment systems"

1. Additional Settlement Obligations (ASOs) and credit limits

As of February, SPEUA modified the payment application date of Additional Settlement Obligations (ASOs) in order for banks to cover them the same day they were generated (previously, this operation was done 2 days later). In October, credit limits granted by Banco de México to members of the same financial group in payment systems were consolidated and credit lines between these institutions were eliminated.

2. Electronic fund transfers

In order to make the payments system safer and at the same time accessible, viable and efficient for banks and users alike, as of March 2002, the Interbank Payment service included SICAM in its credit modality, so settlement in SIAC was no longer an unrejectable transaction. This change served to eliminate the implicit credit Banco de México granted participants to ensure system settlement.

3. Direct debiting

Transfers programmed for periods longer than t+2 were eliminated, and direct debiting was included under Receipt Domiciliation Service, which also became part of SICAM.

4. Check truncation

Since September, checks less than or equal to MXN$2,000 are truncated.

5. Regulations

In December 2002, Congress approved the Payment Systems Act (available only in Spanish)

6. Settlement of securities transactions

As of October, a mathematical algorithm was introduced to optimize the transaction settlement process in SIDV, in order to settle a larger amount by making better use of banks’ liquidity.

7. Payment systems credit

Banco de México modified the function to determine credit limits granted to banks so they depend only on net capital and to ensure it is always incremental.

2003

1. Systemically Important Payment Systems

In January, Banco de México designated SIAC, SPEUA and SIDV Systemically Important Payment Systems, bringing them under the Payment Systems Act. As of then, each year Banco de México designates Systemically Important Payment Systems.

2. ASOs

It was established that, as of August, and in order to comply with ASOs, banks participating in SPEUA would deposit collateral for the equivalent of 125% of the value of the maximum credit line each bank would grant another. This consolidation of collateral in favor of Banco de México was implemented gradually beginning with 5% and up to a maximum of 125%.

3. Check truncation

In February, banks began to truncate checks for lower than or equal to MXN$10,000. In June, this was extended to all checks entering the clearing house.

2004

1. Payment systems credit

As of February, credit granted by Banco de México to SIDV participants began to decrease by 8.33%. On the same date, and by the same amount, the limit on net transfers outside of SPEUA began to be reduced. The net transfer amount was determined by the amount that a bank transferred from SPEUA to SIAC or SIDV less the amount of transfers from such systems to SPEUA.

On the same date, Banco de México began accepting Monetary Regulation Deposits as collateral for obtaining credit in SIAC and to provide liquidity to payment systems participants through its module of repos expiring the same day, (RSP, for its acronym in Spanish).

In December, the overdraft limit in the SIAC was raised by 100% and in the case of the RSP transaction, the limit was raised by 40%.

2. New payments system

In August, the Interbank Electronic Payments System, SPEI®, began operating and substituted SPEUA. SPEI® is a real time settlement system capable of processing a much higher volume and eliminating the risks to which Banco de Mexico was exposed in SPEUA. From the beginning, the MXN$1.00 fee Banco de México charged banks for SPEI® was below SPEUA’s, which was based on the time of day, and was MXN$2.40 on average per transaction.

2005

1. Payment systems credit

In February, credit granted by Banco de México in the SIDV was completely eliminated along with net transfers outside of SPEUA.

In December, Banco de México opted to use auctions to grant banks long-term loans. As of that date, all loans must be guaranteed with Monetary Regulation Deposits or repo transactions involving securities issued by the Federal Government, IPAB and Banco de México.

2. SPEUA

SPEUA stopped operating in August.

3. SIAC

On December 9, the possibility of obtaining overdrafts in the SIAC guaranteed by securities was eliminated, so only Monetary Regulation Deposits can be used. 

2006

1. Cards

On May 8, Banco de México published discount rates and interbank fees for debit and credit cards.

2. SPEI®

In April, Banco de México lowered the fee it charges banks for transactions using SPEI®, from MXN$1.00 to MXN$0.50.

On May 19, a circular was issued stating that AFORES (pension funds), brokerage firms, insurance companies, SOFOLES (special purpose financial institutions), mutual fund distribution companies, and investment fund companies may participate in SPEI®.