This week the Constitutional Court published the ruling that declares the bill that sets the maximum exchange rates (IT) to be charged by issuers in the market for means of payment through credit credit, debit and prepaid cards, in accordance with the Political Constitution of the Republic; therefore, the processing of the project that is on the verge of becoming law.
The foregoing, in accordance with the fact that over a year ago, Chile began to move from a three-part model to a “four-part” model in the means of payment system, so the approval of this law is a new step that seeks to consolidate this model.
Under a four-part model, the card issuer is financed from the fixed charges that can make to the cardholder (the consumer) and through the interchange fee (TI). This TI corresponds to the commission received by said card issuer, by the operator (for example, Transbank, or more recently Getnet), associated directly or indirectly with transactions settled and / or paid by the latter, for the use of cards issued by the former, whether the payments corresponding to such transactions are made directly or through the respective card brand holder (such as Visa, Mastercard or American Express).
The operator will be financed with the difference between the merchant discount (MD) charged to the merchant that received the card, deducting the interchange fee and the commission of the card brands.
Therefore, the four-part model is structured as follows:
Law that regulates Exchange Rates
The aim of this project is to promote competition in the card payment industry through the establishment of IT limits. Therefore, the creation of a technical and autonomous body is established, called the “Committee for the Setting of Limits on Exchange Rates” (Committee), whose function will be to determine the limits on IT for national transactions with payment cards. [1], between issuers and operators of said cards.
Although the original bill set exact percentages that could be charged per transaction (0.3% per credit card transaction and 0.2% per debit card transaction), this aroused some criticism, which is why it was chosen to leave this task to the Committee, so that a fixed figure would not be established by law, as if it was, eventually it would not allow any adaptation to changes in market circumstances.
The Committee for the Setting of Limits on Exchange Rates will be made up of four people, each appointed by the Central Bank, the Commission for the Financial Market (CMF), the National Economic Prosecutor’s Office (FNE) and the Ministry of Finance, and it must fall on one of their respective officials or employees, who must possess prestige for their experience and knowledge in economic, financial, regulatory or free competition matters. While they are in their position, they may not have any participation or interest in banks or companies that support the business, in entities of their business group, or that provide processing services to issuers or operators. The body would be chaired by the member designated by the Ministry of Finance and would meet with the attendance of at least three of its members.
IT limits will be established every 3 years. The Committee, whose deliberations and actions will be public, must publish on its website the resolution stating the agreement to initiate a process to determine said limits, from which a period of 45 business days will be considered, for issuers to and operators, trademark owners, payment processing service providers hired by them, and affiliated entities, consumer associations and, in general, any interested party [2], send opinions and proposals to the Committee, so these can be considered. Additionally, the Committee must contract, at any time during the IT limits determination process, at least one consultancy or technical study, without prejudice to being able to request information from different public bodies or private entities that may be necessary to determine such limits.
The Committee will have to meet regularly, with no more than 6 months between one meeting and another, in order to assess whether there have been substantive changes in the market for means of payment that, in its opinion, justify the review and, in if it is the case, the determination of new limits before the aforementioned term.
Finally, it should be noted that the first members of the Committee must be appointed within 30 days following the publication of this law, while the first transitory limits for IT must be set by the Committee, within the first 6 months from the date of the entry into force of the law. The first preliminary IT proposal, which is set in the first process of determining its limits, will be binding and will be provisional until the definitive publication of the IT limits.
In a ruling dated on July 15th 2021, the Constitutional Court declared that the provisions contained in article 3, paragraph one, while creating the Committee for the setting of limits to exchange rates; in article 4, first, third and fourth paragraphs, as they regulate the composition of the Committee, the appointment of its substitutes and the obligation to make a public declaration of interests and assets; and in article 7, subparagraph nine, second part, as it provides the appeal for reconsideration against the resolutions of the Committee has been resolved or after the period for which it should be considered rejected, the jurisdictional actions that may be exercised before the Courts of Justice; they are provisions of constitutional organic law and that are adjusted to the Political Constitution of the Republic.
Likewise, it declared that it does not issue a pronouncement, in a preventive examination of constitutionality, regarding the provision contained in article 7, final paragraph, which establishes a criminal sanction for infringement of the duty to keep confidentiality, for not dealing with matters of constitutional organic law.
[1] Understanding by these to credit, debit, payment with provision of funds, or any other similar system, whatever its support, issued and operated by entities subject to the supervision of the Financial Market Commission and regulation of the Central Bank of Chile, in relation to the respective issue or operation of said instruments.
[2] In the terms of article 21 of Law No. 19,880 that establishes the Bases of Administrative Procedures, that is, those who promote the process as holders of individual or collective rights or interests; those who, without having started the procedure, have rights that may be affected by the decision adopted therein, and those whose interests, individual or collective, may be affected by the resolution and are present in the procedure as long as no resolution is definitive.
Catalina Wastavino, Associate.
