Honduras | New Regulation for Payment and Transfer Services Using Electronic Money

Published on Dec 23, 2024

Emanuel López, associate in Honduras expert in Finance Law, shares this article on the new regulation for electronic payment services, a key regulation for governing digital money operations in the country. In this analysis, we explore the main changes, requirements, and opportunities this legal framework offers to businesses and users.

The Honduran financial system takes a significant step towards modernization with the entry into force of the new regulation for payment and transfer services using electronic money through the Certification of Agreement No. 01/2024 published in the Official Gazette "La Gaceta" No. 36,635. This regulation seeks to consolidate a secure, efficient, and inclusive ecosystem by regulating the activities of Non-Banking Electronic Money Institutions (INDEL) and other entities that facilitate transactions through technological platforms.

Through the analysis of this new regulation, we explore in depth the objectives, fundamental pillars, and essential procedures it introduces, as well as its practical implications for businesses and users.

1. A Modern and Clear Approach

The main goal of the regulation is to ensure that electronic payment services in Honduras operate under a transparent regulatory framework, protecting both users and providers. The importance of promoting financial inclusion is recognized, opening new opportunities for sectors of the population that have traditionally had limited access to the formal banking system.

This new modern approach is also supported by internal movements in the Central Bank of Honduras (BCH) through memorandum SP-2472/2024 dated August 5, 2024, based on memorandum SP-2471/2024 from August 5, 2024, from the Operations Sub-Management, and the opinion of the Payments Systems Department contained in memorandum SP-2470/2024 from August 5, 2024, recommending to the BCH Board to reform the Regulation for Payment and Transfer Services Using Electronic Money.

Additionally, the regulation emphasizes:

Modern Technological Standards: It seeks more robust interoperability between platforms.

Risk Prevention: It includes provisions to prevent the misuse of technological tools, such as extortion or money laundering.

2. Key Provisions and Advances

a. User Protection: The regulation strengthens user rights through specific measures:

Immediate blocking of electronic wallets in cases of loss or theft.

Prohibition of inactivity fees or minimum balance requirements.

Guarantee that balances will always be available to the user or their heirs.

b. Transparency in Fees: Entities must publish and notify their clients of all applicable fees, commissions, and limits for services, ensuring that the information is clear and accessible.

c. Responsible Data Management: Personal and financial data of users will be protected under strict confidentiality policies, limiting its use to purposes authorized by the client.

3. Mandatory Financial Backing: A Pillar of the System

A key aspect of the regulation is the creation of trusts to back the issued electronic money. INDELs must:

Guarantee 100% of the circulating value through assets established in authorized banks.

Maintain daily conciliation to ensure that balances are consistent with recorded transactions.

Submit periodic reports to the Central Bank of Honduras (BCH) on the movements and balances of electronic wallets.

This backing protects users from potential defaults and strengthens trust in platforms.

4. Operational and Technical Requirements for INDELs

Institutions wishing to offer electronic money services must comply with rigorous requirements, including:

Technological Infrastructure: Ensuring robust systems that allow for the secure operation of electronic wallets and their integration with other payment systems.

Risk Management: Implementing cybersecurity measures and policies to prevent money laundering and other financial crimes.

Agent Training and Supervision: INDELs are responsible for training their agents and electronic money distributors, ensuring they comply with established standards.

Interoperability Standards: All platforms must operate under a scheme that allows for the transfer of funds between different systems, promoting accessibility and efficiency.

5. Authorized Services

The regulation allows regulated entities to offer a wide range of services, including:

Domestic and international transfers.

Conversion of physical Lempira from credit cards, deposits in financial institutions (IFI), or Savings and Credit Cooperatives (CAC) into electronic money and vice versa.

Electronic payments for goods and services.

Purchase of goods and services with electronic money.

Collection, payments to suppliers, salaries, and wages for affiliated companies.

Management of international remittances through electronic wallets.

Transactions in e-commerce, facilitating the growth of digital commerce in the country.

6. Steps to Establish an INDEL

The process to establish a Non-Banking Electronic Money Institution (INDEL) under this regulation involves the following steps:

Step 1: Application Submission

Prepare a dossier addressed to the Central Bank of Honduras, accompanied by the required legal and technical documents, such as:

Draft of the articles of incorporation.

Organizational chart and business plan.

Certifications of technological infrastructure.

Step 2: Establishment of the Company

Create a corporation with a minimum capital according to the following table:

Average Daily Balance

Minimum Capital Required