The Central Bank of Jordan
The Central Bank of Jordan is the sole financial sector regulator and overseer in Jordan. As such, the CBJ represents a fundamental player in JoPACC's governance as a payment system operator. JoPACC maintains a close and productive relationship with the Central Bank to ensure coordination and collaboration on various issues, from the safety of the overall national payments system to financial inclusion.
The Commercial Banks of Jordan
Jordan's commercial banks possess the biggest market share of its overall financial sector. Furthermore, they represent the largest segment of financial institutions that participate in JoPACC's systems. JoPACC maintains a close professional relationship with all banks operating in Jordan and ensures their perspectives are represented in the design and operation of all payment systems affecting them.
Non-Bank Financial Institutions
Non-Bank Financial Institutions, which include Payment System Operators, Payment Service Providers, Microfinance Institutions, and Financial Technology companies, represent a critical enabler of Jordan's economic growth and development. This is especially the case since they focus on serving the unbanked and increasing financial inclusion. Therefore, JoPACC will continuously aim to cater for these institutions and foster their capability to innovate on top of its platforms.
The Jordanian Government
The Jordanian government has been at the forefront of championing digitalization across all sectors in Jordan. This renders them a vital stakeholder to assist JoPACC in integrating digital financial services across different sectors in Jordan, thereby enhancing digital liquidity for end-users everywhere.
Individuals and Businesses
Individuals and businesses lie at the core of JoPACC's strategy, outlook, and interventions. Consequently, they reside at the heart of JoPACC's governance. Although JoPACC does not directly deal with individuals and businesses, it engages in market research and interventions to better understand the needs of financial consumers and bridge the gap between the providers and the consumers.
Legal and Regulatory Framework
JoPACC exists within a well-founded legal environment for payment systems based on the rules, regulations, and circulars of the Central Bank of Jordan and JoPACC's Articles of Association. JoPACC adheres to the laws of the Hashemite Kingdom of Jordan, where it is incorporated and carries out all of its operations. Article 50 of the amended Central Bank Law No. 24 of 2016 enables the Central Bank of Jordan to allow other entities, such as JoPACC, to operate payment systems. In such cases, the Central Bank takes on the role of a regulatory authority that oversees the operations of the payment system operator and the payment system itself. The rights of the Central Bank as a regulatory authority are elaborated on in the Electronic Payment and Money Transfer Bylaw No. (111) of 2017 and in the Electronic Transactions Law No. 15 of 2015. These rights include setting and approving the operating procedures and technical standards of electronic payment systems, determining the financial and accounting requirements that must be followed by the system operator, and requesting any information deemed necessary from the payment service provider about the system or the operator itself.
The rules and regulations that dictate the operations of a payment system operator within Jordan are primarily found in the Electronic Payment and Money Transfer Bylaw No. (111) of 2017. This bylaw gives private companies the right to operate electronic payment systems as long as they are licensed to do so and they meet the requirements set in the bylaw by the Central Bank of Jordan. JoPACC has received the necessary approval and licensing from the Central Bank of Jordan to act as a payment system operator. As a licensed operator, it is within JoPACC's objectives to operate digital payment systems, the needed clearing and settlement procedures for the transactions that occur on these systems, and any other activities related to these systems that are approved by the Central Bank of Jordan.
Additionally, article (74) of the Banking Law No. (28) of 2000 and amendments detail exceptions to the bank secrecy laws stipulated in articles (72) and (73) of the same law. These exceptions waive the prohibition on the exchange of client data in instances where the CBJ sees fit for the safety and efficiency of domestic banking. As such, the exchange of client information via JoPACC's infrastructure for the execution of payments is well within these exceptions, as information sharing preserves the integrity of the overall financial sector and improves the capacity of the financial institutions to serve their clients and the overall market.
In addition to the aforementioned laws and regulations, the Civil Law No (43) of 1976, which regulated contract law in Jordan, also supports JoPACC's activities as a payment system operator. The participants on any system operated by JoPACC must sign a contract document binding themselves to the system's operating rules, participation requirements, service level agreements, and business continuity plans. In addition, participants are contractually obliged to comply with CBJ arrangements to ensure that they meet any of the obligations that arise because of their participation in the systems. JoPACC is committed to always seek the consultation of the CBJ before issuing and/or amending any of the operating rules and procedures it maintains over its payment systems.
The governance of a payment system should incorporate international standards for the management of risks and the communication of payment data across the ecosystem. Subsequently, JoPACC has integrated prominent international standards into its own governance structure. For example, JoPACC has adopted the ISO 20022 messaging standard for its instant payment scheme, CliQ, and has upgraded the Jordan Mobile Payments Switch to this standard.
Importantly, given their potential to transmit shocks across the financial system, the management of risks for payment systems should form a foundational element of a payment system's governance. The Principles for Financial Market Infrastructure (PFMI), published in 2012 by the Committee on Payments and Market Infrastructure, are the international standards for financial market infrastructures (e.g., payment systems) to strengthen and preserve financial stability. The PFMIs were designed for systemically important payment systems, which do not include any of JoPACC's systems. That being said, JoPACC has considered the PFMIs as integral guiding principles of its Risk Management culture, using it as a benchmark for its annual risk assessments. In doing so, JoPACC will apply the subset of the principles relevant to payment systems deemed applicable to its own payment systems. JoPACC further aims to improve the governance surrounding the financial market infrastructure in Jordan, decrease the overall risk on the national payment system, and improve Jordan's compliance with the PFMIs.