Categories: Banking Law and Financing
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Costa Rica proposes that the Central Bank and the Commission promote competition and set a single percentage in the fees paid by businesses for accepting credit or debit cards
The affiliation commissions in Costa Rica are, in their majority, superior to 4% without differentiating between credit and debit cards, while at an international level the affiliation commission is located at much lower rates.
The spread of credit and debit cards, as well as the increase in transactions with plastic, have generated a distortion in the economy affecting specially small businesses, which must pay a significant amount of their income to banks, translating into bigger prices and equally affecting consumers who must pay slightly more for each product.
The annual profits of the financial system for the collection of these commissions, according to Chamber of Commerce estimations, are approximately $175,000,000.00 (one hundred and seventy-five million dollars). On the other hand, countries such as the European Union have a regulation where a cap is set at exchange rates of 0.2% for debit cards and 0.3% for credit cards.
In Latin America, for example Mexico, the Central Bank periodically reviews the mechanism of determination and the level of exchange rates and, in addition, banks must make them public. Currently, the amount charged to businesses is 1.91% for credit cards and 1.15% for debit cards.
Bill number 21.177, which aims to empower the government to regulate the commissions charged by financial entities to businesses, was presented before the congress by several representatives.
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What the proposal states
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The proposal states that “… It should be a single percentage for all businesses and the commission for transactions with debit cards should be lower than the one charged for credit card transactions, which will be reviewed and published every 24 months by the issuing banks.”
Regarding the topic, María Isabel Cortés (director of the Costa Rican Banking Association) said to Crhoy.com, that in the determination of commissions “… the volume of transactions of each trade greatly influences, given that there are significant fixed costs. Exchange allows issuers to have the incentive to widely distribute modern means of payment, especially debit cards that, because of their marginality, would not be possible to serve if there were no adequate exchange rates. ”
Cortés added that “..” The exchange rate must maintain a balance, if it was very low, it wouldn’t encourage the task of issuing cards and cardholder attention and if it was very high, it wouldn’t encourage the acceptance of the cards as a means of payment. ”
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The objective of this law is to create the regulatory framework for the establishment of exchange and acquiring commissions for purchase transactions with credit and debit cards. It would also guarantee a more competitive environment and increase fiscal traceability, in benefit of businesses, consumers and the Public Treasury.
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