It covers payment methods and information on, banking systems, foreign exchange controls, and U.S. and correspondent banking.
Methods of Payment
The method of payment most used by local importers is by letter of credit, followed closely by wire transfers. Under the second method a local importer, through his/her bank, transfers payment to the foreign exporter upon notice (proof) of shipment of the merchandise. Businesses prefer this method since it involves less administrative costs than a letter of credit. Other methods of payment are used to a lesser degree. For more information about the methods of payment or other trade finance options, please read the Trade Finance Guide available at https://www.trade.gov/trade-finance-guide-quick-reference-us-exporters.
The following are credit-rating firms operating in Paraguay:
- Equifax Paraguay
The Banking Superintendent regulates banks and finance companies. The Banking Superintendent is housed within, and is under the direction of, the Central Bank of Paraguay. Although deposits are supposed to be guaranteed up to 172 million Guaranis (approximately $25,250 as of July 2021), the Deposit Insurance program does not have a legal framework to implement the deposit protection. The Central Bank operates autonomously, although it is not truly independent because it needs the Treasury to capitalize it.
The financial sector regulated by the Central Bank also includes eleven finance companies dedicated to smaller consumer operations not served by banks. The banking system operates mostly on short- to medium-term credit (twelve months is the usual maximum for commercial transactions, although private financing for vehicles and homes is available on longer terms) in both local and foreign currency.
There is also a large credit union sector in Paraguay, which is self-regulated and does not fall under the purview of the Central Bank. Credit unions could hold as much as one-third of total financial system assets, but their assets are not included in Central Bank data.
Paraguay has a high percentage of unbanked citizens. Seven out of 10 adults do not have bank accounts. Many Paraguayans use alternative methods to save and transfer money. In recent years, the use of e-wallets has grown considerably to fill this void. . According to the Central Bank of Paraguay, the total transactions increased by 51.2 percent, from USD 374 million in January-September 2019 to USD 565 million in January-September 2020. The number of quarterly transactions also increased considerably from 4.9 million in April-June 2019 to 8.5 million in July-September 2020. E-wallet providers noted this increase was the result of the COVID-19 subsidies transferred to the e-wallet of beneficiaries outside of the formal banking sector. In response to this growth, the Central Bank published regulations on e-wallets in February 2020 to expand “know your customer” (KYC) and other requirements to match those of traditional bank operations.
Foreign Exchange Controls
There are no controls on foreign exchange transactions, apart from bank reporting requirements for transactions in excess of $10,000. Importers and exporters can buy and sell foreign exchange freely at commercial banks, finance companies, or exchange houses at the going market rate.
US Banks & Local Correspondent Banks
Citibank is the only U.S. bank operating in Paraguay. Nearly all banks have correspondent banking arrangements with U.S. banks, primarily in New York and Miami.