Key Facts for Panama
- Primary real-time rails: Xpress, modernized Telered ACH
- Typical settlement times: Transactions settle in seconds.
- Common limits: Varies by institution.
What “real-time payments” means in Panama
In Panama, real-time payments are defined as transactions available 24/7 with immediate fund settlement, even between different banks. Systems like Xpress, which initiates transfers using only a phone number, exemplify this shift. The scope has grown from expediting welfare payments via the Digital Vale program to covering all interbank transactions, aiming to supplant cash and checks. While a formal legal definition is still developing, parliamentary discussions are in progress to establish a foundational framework for an open, instant payment system, signaling a move toward official regulatory structure.
The network's primary operator is Telered, S.A., which modernizes and runs the country's ACH infrastructure in coordination with the Superintendency of Banks. While specific subsidiary clearing houses are not detailed, the system integrates with the National Bank of Panama’s Real Time Gross Settlement System (industry norm). A key component of this modernization is the adoption of the ISO 20022 messaging standard. This move aligns Panama’s financial messaging with a globally recognized protocol, preparing its infrastructure for future cross-border interoperability and advanced data-rich payment services.
By adopting the ISO 20022 standard and modeling its systems after regional successes like Brazil’s Pix, Panama is positioning itself to integrate with the global financial ecosystem.
Payment Rail Overview
Telered ACH
Telered modernized Panama's Automated Clearing House (ACH) system in 2021 to support instant payments, moving beyond its previous batch-processing model. This upgraded network operates 24/7, allowing for immediate fund availability for interbank transfers. It uses the ISO 20022 messaging standard to facilitate real-time transactions between its 46 member financial institutions.
- 24/7/365 Availability: The service operates continuously, allowing transactions to process at any time without waiting for standard business hours.
- Immediate Fund Settlement: Funds become available in a recipient's account within seconds, even when the transfer occurs between different banks.
- ISO 20022 Standard: Adopts a global messaging protocol that supports richer data and prepares the network for future international interoperability.
- Broad Interoperability: Connects dozens of member financial institutions, creating a widespread network for instant payments across the country.
Pros and Cons
- Pros: Instantaneous transactions, 24/7 operation, encourages digital payments, based on an international standard.
- Cons: Adoption by all member banks is a phased process, and its growth depends on the stability of the broader financial environment.
Xpress
Xpress is a real-time payment system that simplifies interbank transfers by using a phone number as the primary identifier. It is designed to create an integrated ecosystem connecting multiple banks, regardless of their underlying infrastructure. The system focuses on both transaction speed and robust user security to align Panama with global instant payment trends.
- Phone Number Alias: Allows users to send and receive money using a simple phone number instead of complex bank account details.
- Instant Interbank Transfers: Moves funds in real-time between accounts at different participating financial institutions.
- Security Focus: Built with an emphasis on advanced security measures like multifactor authentication and AI-powered fraud detection to protect users.
- System Integration: Connects disparate banking systems through secure open APIs to achieve broad interoperability.
Pros and Cons
- Pros: Simplified user experience, accelerates transactions, promotes financial modernization, LN-friendly routing possible.
- Cons: Increased speed creates higher vulnerability to digital fraud, and integrating diverse banking systems presents significant technical hurdles.
Vale Digital
Introduced in 2021, Vale Digital is an electronic payment platform created specifically to distribute government welfare payments. Recipients access their funds through a digital onboarding process and make purchases by having businesses scan a QR code on their national identity card. This action automatically debits their account in real-time, providing a direct and efficient method for social assistance.
- Welfare Distribution: Designed to expedite the delivery of social assistance funds from the government to citizens.
- ID-Based Payments: Uses the barcode or QR code on a citizen's identity card to authorize transactions, removing the need for a separate payment card or app.
- Digital Onboarding: Offers a fully digital process for recipients to enroll in the program and access their funds.
- Automatic Debit: Makes the purchase process frictionless by automatically debiting the recipient's account upon a successful scan at a merchant.
Pros and Cons
- Pros: Deployed quickly for urgent welfare needs, highly accessible for recipients, uses simple and familiar QR technology.
- Cons: Its use is restricted to welfare payments and is not currently open for general public or private sector transactions.
Limits, Fees, and SLAs
- Operating Hours: The modernized instant payment network operates 24 hours a day, with funds available immediately for interbank transactions.
Compliance and Risk
KYC/KYB & AML
Panama's financial system operates under a robust AML/CTF framework. While specific digital asset laws are pending, all financial entities must perform customer due diligence, monitor transactions, and report suspicious activity to the Financial Analysis Unit, requiring a risk-based approach to compliance.
Data Residency & Privacy
Panama's regulations emphasize data transparency for AML purposes over strict data residency rules. While specific data protection laws for digital payments are not detailed, companies must disclose ultimate beneficial owners to a central registry, increasing oversight but impacting user privacy.
Fraud Controls
The immediacy of real-time payments introduces new fraud vectors. Financial institutions are adopting multifactor authentication and AI-powered detection, while regulations mandate robust monitoring of transactions to mitigate risks like phishing and malware.
Recordkeeping & Audits
Panamanian regulations mandate that all financial entities maintain detailed records of customer due diligence and all transactions for at least five years. This information must be readily available for audits or investigations by regulatory bodies to ensure transparency and compliance.
Lightning Network Integration as a Solution
The Lightning Network is a second-layer protocol built on Bitcoin, facilitating instant, low-cost transactions through off-chain payment channels. While local RTP rails like Xpress modernize domestic payments, they often operate within national borders. The Lightning Network can act as a global bridge, connecting Panama’s financial system to a worldwide network for cross-border payments where local systems cannot reach. This provides a universal layer for international commerce and remittances, extending the capabilities of domestic infrastructure.
While domestic RTPs offer settlement in seconds, the Lightning Network matches this speed with significantly lower costs, often fractions of a cent per transaction. This cost efficiency makes micropayments economically practical. The primary distinction is reach; where local rails are confined to Panama, the Lightning Network provides access to a decentralized, global payment system. It connects users and businesses to international markets without relying on traditional correspondent banking networks, offering true worldwide financial connectivity.
- Cross-Border Complexity: It bypasses traditional banking intermediaries, removing the high fees, currency conversion delays, and settlement times associated with international payments.
- Scalability and Micropayments: The network is built to process millions of transactions per second at a very low cost, making small, frequent payments for services like streaming or gaming economically viable.
- Limited Financial Access: It provides a direct payment rail to new markets and underbanked regions where traditional financial infrastructure is expensive or unavailable, requiring only an internet connection.
Integrating the Lightning Network offers a path to building a truly global, open, and efficient payment architecture.
B2B Enterprise Use Cases
- Supplier Payments – Businesses can pay international invoices instantly through a direct payment channel, bypassing the traditional banking system.
Business value: Slashes cross-border transaction costs and settlement times for stronger supply chain partnerships. - Merchant Settlement – Retailers and e-commerce platforms receive customer funds immediately, bypassing multi-day card network settlement cycles.
Business value: Improves cash flow with real-time access to revenue and lower processing fees. - Treasury Optimization – Corporate treasuries can move capital between global accounts 24/7 to manage liquidity and respond to market changes.
Business value: Provides continuous global liquidity and reduces reliance on banking hours for fund transfers. - Global Payroll – Companies can execute instant salary payments to international employees and contractors directly to their digital wallets.
Business value: Simplifies paying a global workforce and gives employees immediate access to funds. - API Micropayments – Software platforms can charge or pay for API usage in real-time, settling fractions of a cent per transaction automatically.
Business value: Supports new pay-per-use models and reduces the cost of metered digital services.
Cross-Border Transactions and Remittances to Panama
Cross-border real-time payments present major hurdles. Reaching markets like Panama requires connecting separate domestic payment rails, a process known as rail bridging. Transactions must also follow specific FX paths for currency conversion, which adds cost and delay. Businesses face dual compliance burdens, satisfying AML/KYC rules in both the sending and receiving countries. This friction creates operational pain points, including higher fees and potential payment delays, especially in corridors with differing regulations.
- US-Panama: This is a primary corridor for trade and family remittances. Payments often move through traditional banks, which can be slow and costly due to the multiple intermediaries involved in the correspondent banking system.
- Panama-India: A growing business corridor where payments face significant operational friction. Companies must satisfy Panama's AML obligations while also dealing with India's distinct foreign exchange and digital asset regulations, creating compliance complexity.
- Panama-Colombia: As a key regional partner, transactions between Panama and Colombia support substantial trade and migration flows. These payments are subject to currency fluctuations and differing banking regulations, which can complicate real-time settlement.
The Lightning Network offers a solution by using Bitcoin as a universal settlement asset. This model bypasses slow and expensive correspondent banking networks, allowing for instant, low-cost payments across borders and connecting previously isolated domestic payment systems into a single global grid.
How Lightspark Makes Integration Easy
Lightspark helps fintechs, digital banks, wallets, and exchanges integrate with the Lightning Network to offer global, real-time payments. We abstract away the operational complexities of liquidity management and smart routing, allowing you to focus on your core product. Our platform includes enterprise-grade compliance tools and comprehensive developer tooling, including APIs and SDKs, for a direct and efficient implementation. This infrastructure makes it possible to achieve sub-second settlement globally for a fraction of the cost of legacy systems. To learn how you can connect your business to a more open and efficient payment network, Talk to our team.
Sources and Further Reading
- https://iupana.com/2023/02/13/these-are-latin-americas-instant-payment-systems/?lang=en – Latin America's instant payment systems.
- https://www.lightspark.com/contact – Contact the Lightspark sales team.
- https://www.lightspark.com/knowledge/how-the-lightning-network-is-transforming-bitcoin – Lightning Network's impact on Bitcoin.
- https://www.lightspark.com/knowledge/is-crypto-legal-in-panama – Panama's cryptocurrency legal framework overview.
- https://www.lightspark.com/news/insights/what-are-lightning-payments – Explaining low-cost Lightning payments.
- https://qvisiontechnologies.com/en/blog/digital-transformation-in-panamanian-banking-technological-implications-and-challenges/ – Panama banking's digital transformation challenges.
- https://www.telered.com.pa/en/telered-reinventa-y-moderniza-red-de-pagos-instantaneos-en-panama-en-2021/ – Telered's instant payment network modernization.
