Who We Are
Governance is a central tenant of how JoPACC aims to achieve its objective of an inclusive digital economy. As a payment system operator, JoPACC believes that corporate governance alone is not sufficient to assist it in achieving the goals set out in its strategy. Instead, we view our governance as an interplay of internal and external factors, interacting to produce inclusive, safe, efficient, reliable, and interoperable payment infrastructure for Jordan's economy.
As a payment system operator, JoPACC recognizes the importance of disclosure and transparency in communicating its access, participation, and scheme rules. Thus, JoPACC ensures communicating all such rules with prospective participants. Additionally, JoPACC seeks the consultation of participants before issuing such rules and procedures and before making any amendments. Furthermore, JoPACC designs its participation, access, and scheme rules in a way that would encourage new entrants into the payments ecosystem without compromising the high-level objectives of safety and security.
Internal Governance and Board of Directors
Ownership and Governing Body
JoPACC is a private shareholding company owned by the Central Bank of Jordan, with a share of 45%, and all commercial banks in the country, currently 22 banks, holding different numbers of shares based on their contribution to JoPACC’s capital.
JoPACC's Articles of Association set out JoPACC's shareholders and corporate governance arrangements. As such, JoPACC's Articles of Association stipulate that JoPACC's Board of Directors (BoD) comprises even members with a minimum of three independent members (Independent members are representatives of shareholders with a share of less than 5%).
Two dependent members are appointed by the Central Bank of Jordan (CBJ) as long as the CBJ remains a shareholder. The other independent members are elected by the General Assembly every three years. Each member receives one vote, irrespective of the shares owned by their institution. The Chairperson of the BoD must be one of the members representing the CBJ, and the BoD elects a Vice-Chairperson.
JoPACC's Articles of Association introduce the BoD's authorities in directing the company and representing it and conducting any business to ensure the continuity of its operations and the achievement of its objectives. The BoD must regularly present JoPACC's externally audited financial statements periodically to the General Assembly.
The General Assembly is comprised of all of JoPACC's shareholders. JoPACC's Articles of Association govern the frequency and type of meetings of the General Assembly and the topics and issues that can be presented to the General Assembly. JoPACC's General Assembly must endorse its financial statements and any changes to JoPACC's Articles of Association and/or company objectives, elect its Board of Directors, and appoint its External Auditor. Each member of the General Assembly has one vote, whereby shareholder votes are equal and not based on the number of shares owned.
Responsibility, Accountability, and role of the Board of Directors, its Committees, and its Executive Management
JoPACC has a clearly defined and articulated Responsibilities and Accountabilities (R&A) Matrix, detailing the responsibility and accountability held by each of its BoD and the Executive Management. JoPACC's R&A Matrix recognizes three areas of responsibilities and authorities: strategic, financial and administrative, and human resources. It separates the recommendation, approval, and endorsement of activities between the Executive Management, the BoD, and the General Assembly.
Board-level committees assist the BoD in carrying out its oversight functions over the operations of the company. Each of the committees is comprised of 3 Directors. At least one of the Directors must be an independent Director, and the president of the committee must be an independent Director.
The committees cover the following topics:
The aim of this function is to assist the BoD in its internal oversight function, more specifically:
- Executing the internal audit function and evaluating its independence and effectiveness
- Maintaining the trustworthiness of JoPACC's financial statements
- Evaluating the external audit function and ensuring its effectiveness
This function aims to assist the BoD in monitoring and overseeing the risk management policies, processes, and practices at JoPACC while setting and monitoring JoPACC's risk appetite.
This function aims to assist the BoD in monitoring and overseeing compliance to laws, regulations, and internal policies.
Nomination and Remuneration
The Nomination and Remuneration function's main objectives are:
- To assess the effectiveness and efficiency of the BoD and the Executive Management
- Ensure that the appointment of Directors and the Executive Managers is compliant with the company's policies
- Evaluate the skills and competencies required for the BoD and the Executive Management and ensure the fulfillment of those requirements
Managing Conflicts of Interest
As part of their commitment towards JoPACC, Directors are expected to declare and avoid any conflicts of interest when occupying their capacity on JoPACC's BoD. The presence of the CBJ on the BoD also mitigates any conflicts of interest, as the CBJ prioritizes the public policy objectives of safety, efficiency, financial inclusion, collaboration amongst institutions, and overall interoperability over the interests of individual institutions. Finally, the BoD is elected by all shareholders, representing Jordan's banking sector, on the premise that they act in the best interest of JoPACC and the overall sector.
Qualifications of Board of Directors
In order for internal governance to reach its true potential, the BoD must possess a diverse set of skills and competencies. This includes knowledge of technology, strategy, business, operations, and regulations. JoPACC's BoD is elected from a pool of senior experts in the financial sector; the Chief Executive Officers of commercial banks in Jordan. JoPACC's nominations and remuneration committee is entrusted with ensuring the organization's diversity of skills and competencies.
JoPACC's organizational structure can be deemed to have two distinct areas: the first is dedicated to the implementation of its strategy, which is endorsed by its Board of Directors. This function comprises several departments, each specializing in one area of JoPACC's operations and developments. In engaging with these areas, these departments bring to life JoPACC's strategy in all of its strategic objectives and goals. These units include:
- Administration Department, managing human resources, logistics, and general administration
- Finance Department, managing the company's financials and payments
- Knowledge Management and Business Analytics Department, focusing on extracting and disseminating knowledge across the organization and the market
- Project Management Office, supporting the implementation and completion of projects across several functions at the company
- Business Development & Operations Department, focusing on managing and operating JoPACC's core payments infrastructure in addition to enhancing and expanding JoPACC's solutions, products, and platforms
- Data Analytics & Business Intelligence Department, regularly analyzing system data and extracting insights that feed the decision-making process internally and externally
- IT and Software Development Department, focusing on developing internal technology solutions for JoPACC's payments infrastructure and providing technical support
- Network and Infrastructure Department, focusing on developing and maintaining JoPACC's technical infrastructure and assets securely
- Information & Cyber Security Department, ensuring the security and confidentiality of information and data held by JoPACC
- Fintech & Innovation Hub, which incubates and accelerates Fintech innovations and provides a regulatory sandbox for testing financial services
The second function represents the internal oversight function at JoPACC. These functions have direct access to the BoD and ensure that JoPACC's daily operations are conducted safely. These units include:
- The Internal Audit Department, independently assessing the company's financial, technical, and business processes and policies
- The Risk Management Department, enacting JoPACC's risk policies and processes and ensuring maintenance with the risk appetite levels endorsed by the BoD
- The Compliance Department, ensuring compliance with local and international regulations and standards applicable to JoPACC
Objectives and Alignment with Public Policy Objectives
Safety and Efficiency
Safety could be defined as the containment of the financial and non-financial risks that typically arise within the payment system or are transmitted by it, which threaten to impair the functioning of the system and/or the financial stability of the overall economy. Efficiency, on the other hand, is defined as the resources required by a payment system to perform its function, where increasing efficiency will reduce costs and increase the speed of processing higher volumes of transactions.
The CBJ, through its oversight function, ensures the safety and efficiency of the national payment system in Jordan. JoPACC has aligned itself with the CBJ's commitment to this by emphasizing safety and efficiency in its strategy. In addition, JoPACC has adopted the PFMIs as a central tenant of its Risk Management Framework. The PFMIs lay particular emphasis on the safety and efficiency of payment systems.
The National Financial Inclusion Strategy (2018-2020) crystalized the CBJ commitment towards Financial Inclusion as a public policy objective. JoPACC's strategy for the years 2019-2022 emphasized the importance of the NFIS and highlighted its objectives as core guiding principles for JoPACC. Given this emphasis on financial inclusion in JoPACC's strategy, its interventions will be anchored in the high-level goal of an inclusive and digital economy.
Market Competitiveness and Representation
The World Bank's Governance of Payment Systems report emphasized the importance of market competitiveness in the overall governance of a national payment system. This responsibility often lies with financial market regulators. JoPACC is a private sector entity jointly owned by the CBJ and the commercial banks operating in Jordan. Its decision-making body (the Board of Directors) represents the interests of the public sector (through the Central Bank of Jordan) and the private sector (the commercial banks). As a result, JoPACC's operations are geared towards increasing the private sector's competitiveness and attractiveness on a regional scale.
Interoperability is an integral objective that has synergies with many other hallmarks of a healthy and prospering digital payments infrastructure. JoPACC strives towards increasing interoperability across the Jordanian payments market. It aims to do this through the standardization of payment instruments and integration of payment infrastructure where possible. In its vision towards a digital economy, JoPACC views interoperability as a key stepping-stone.
Introducing and developing digital financial infrastructure would be futile were it not for sustainability. JoPACC's governance arrangements are geared towards ensuring the sustainability of JoPACC and its interventions. JoPACC engages in self-assessments and evaluations to measure and evaluate the sustainability and success of its intervention, reincorporating the lessons learned into its future operations and procedures.
Payment systems need to be reliable. Hence, JoPACC's governance, internal processes and procedures, organizational structure, and strategic objectives emphasize increasing the reliability of payment systems in the local market. We do this by offering 24/7 support to participants to extend these services to their clients.
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.
Commitment Towards the Principles for Financial Market
The Principles for Financial Market Infrastructures are the international standards aiming to preserve the safety, efficiency, and resilience of systemically important financial market infrastructure such as payment systems. Systemically Important Payment Systems (SIPS) are those systems that hold the potential to transmit and propagate financial shocks across the economy. The standards were first published by the Bank of International Settlements’ (BIS) Committee on Payments and Market Infrastructures (CPMI) and the International Organization of Securities Commissions (IOSCO) in 2012.
JoPACC is a payment system operator licensed to conduct its operations in Jordan by the Central Bank of Jordan. As such, JoPACC has taken it upon itself to ensure the highest levels of safety, efficiency, and resilience of the payment systems under its operations. To ensure that its operation of payment systems is aligned with international best practices, JoPACC has incorporated the Principles of Financial Market Infrastructures into its Risk Management Framework.
It is worth noting that the PFMIs primarily address SIPS. SIPS are payment systems which have the potential to trigger or transmit systemic disruptions; these include, among other things, systems that are the sole payment system in a jurisdiction or the principal system in terms of the aggregate value of payments, and systems that mainly handle time-critical, high-value payments or settle payments used to effect settlement in other FMIs.
Thus, none of JoPACC’s systems can be deemed as SIPS, neither have they been designated as such by the Central Bank of Jordan. That being said, JoPACC has voluntarily aligned itself with the PFMIs to ensure the highest levels of safety, efficiency, and resilience for its payment systems and ensure the compliance of Jordan’s National Payment System with international standards and best practices.
Through its Risk Management Framework, JoPACC is committed to leverage the PFMIs to minimize the risks arising across its financial market infrastructures, all while increasing safety and efficiency. More specifically, JoPACC is devoted to the following:
- Utilize the PFMIs as a guiding framework on the safe and efficient operation and management of payment systems
- Conduct annual self-assessments against the PFMIs, to document JoPACC’s adherence to the relevant principles and the progress it makes over the years
- Identify gaps between JoPACC’s current practices and those stipulated in the PFMIs and assess said gaps to formulate action plans based on criticality and priority
- Abide by the “Disclosure Principle” by publishing summary reports of its assessments against the PFMIs, its access criteria, governance arrangements, and operating rules to increase transparency and enable participants to better quantify their risks
- Maintain a viable recovery or orderly wind-down plan to reduce the disruption caused by shocks or times of market stress
Access Model and Criteria
JoPACC’s access models and criteria are based on international best practices to ensure fair and safe participation across its systems. The following participation types are defined and classified according to two main factors: the mode of connectivity to the payment infrastructure and the settlement method. Each participant has to meet only one of each settlement method and the mode of connectivity to the payment infrastructure.
Mode of Connectivity to the Payment Infrastructure
- Direct Participants: an entity with direct access to the payment system’s services and is bound by the rules of the payment system. Its transactions are cleared and recorded by the payment system through a direct link to it. All settlement participants must participate as direct participants.
- Indirect Participants: an entity that does not have direct access to the payment system’s services and is typically not directly bound by the rules of the payment system but whose transactions are cleared and recorded by the payment system through a direct participant. Indirect participation is possible through a bilateral agreement with a direct participant.
Mode of Settlement
- Settlement Participants: participants with a direct participation arrangement at the Real-Time Gross Settlement (RTGS) system owned and operated by the Central Bank of Jordan. Settlement participants maintain settlement accounts at the CBJ, enabling direct settlement of transactions cleared through other payment systems.
- Non-settlement Participants: entities that do not have direct access to the RTGS system owned and operated by the Central Bank of Jordan. Non-settlement participants settle transactions cleared via a settlement participant, where bilateral agreements must exist between the settlement participant and the non-settlement participant.
As a prerequisite for joining any of JoPACC’s systems, JoPACC reviews the entity’s nature of intended operations on its payment systems. In doing so, JoPACC reviews relevant licensing by the CBJ and compliance with any relevant regulations applicable to the entity. Furthermore, JoPACC evaluates the capacity of the entity to comply with its technical and operational requirements for the relevant scheme before deciding on the mode of connectivity. As for the mode of settlement, all entities holding a settlement account at the CBJ must participate as settlement participants, whereas all other entities must participate as non-settlement participants.
Based on the above access models, JoPACC will maintain the following access and participation types through its payment systems:
- For Commercial Banks, access to JoPACC’s payment systems will be through a Direct Settlement arrangement.
- Non-bank regulated financial institutions, such as Payment Service Providers, will access JoPACC’s payment systems through a Direct Non-Settlement arrangement.
- Non-bank financial institutions that are not regulated by the CBJ, such as FinTechs, will access JoPACC’s infrastructure through an Indirect Non-settlement arrangement.
For JoPACC to maintain its position as an enabler of financial innovation, exceptions to the above participation arrangements can be made for non-financial institutions or unregulated non-bank financial institutions. Such exceptions will follow a comprehensive review of the entity’s cybersecurity, business, risk management, compliance, operational, and governance policies and practices, where such institutions can join following a Direct Non-Settlement arrangement.