Fintech in Peru

Peru is an extremely attractive country for Fintech companies that want to enter the Peruvian market and cover those sectors and services of the financial system that have not been taken over by the current authorized companies of the financial system. This segment of the population, which includes people who do not have a stable or formal job or small businesses, generates a considerable percentage of Peru's GDP and supports a large part of the country's productive sector.

As for Fintech companies currently operating in Peru, according to Finnovista in its 2018 report on the current state of Fintech in Latin America, the Fintech market in Peru is distributed as follows:

1. Online loans (24%);
2. Payments and remittances (21%);
3. Currency exchange (11%);
4. Crowdfunding (9%);
5. Business Finance Management (9%);
6. Technology (6%);
7. Savings (6%);
8. Alternative credit rating (6%);
9. Insurance (4%); and,
10. Personal finance management (4%).

There is no general regulation applicable to all Fintech activity. Nonetheless, depending on the business, how it is carried out and its scope, specific sector regulations could apply. In general, the regulations applicable to Fintech companies can be divided into three groups:

1. regulations applicable to all types of business (provisions relating to the contractual relationship, abusive clauses, personal data, consumer protection, tax regulations, etc.);
2. regulation that could apply depending on the type of activity (regulations against money laundering and terrorist financing and interest rate limits, etc.); and,
3. sectoral regulations that could apply (this will depend on whether the Fintech companies carry out an activity for which prior authorization or at previous registration is required).

There is no official information regarding the COVID 19 crisis; however, the Peruvian Fintech Association in June 2020 conducted a survey of its members that showed the following data:

1. 53.8% of Fintech companies have increased their monthly income compared to the same month last year.
2. 12.8% of Fintech companies have a similar income compared to the same month last year.
3. 33.3% of Fintech companies have a lower income compared to the same month last year.

The main challenge for a foreign Fintech company that is currently seeking to enter the Peruvian market is the lack of regulation of the activity, which generates uncertainty regarding the regulatory treatment. However, this is also an advantage because in the absence of regulation a space for negotiation is created between companies and regulators in order to establish friendly regulations, considering the needs of each service.

As indicated above, the Peruvian market is highly informal and many of the economic agents cannot access quality financial services. Consequently, Peru has unique potential for Fintech companies, as there is a large unattended demand for financial services right now.

A regulation project has recently been published to regulate crowdfunding activities. It is a draft regulation that was subject to comments from interested parties and is expected to be approved early next year. The idea of regulating crowdfunding activities comes from the Peruvian government's proposal to seek alternative means of financing for small businesses, so there will probably be more regulation in this regard in the coming years.

Likewise, recently the Financial Intelligence Unit declared that it was preparing a diagnosis on the use and presence of cryptocurrencies in Peru, which would serve for a subsequent regulation of cryptocurrencies. Consequently, it is very likely that the corresponding regulation will be issued in relation to cryptocurrencies in the near future.