{"id":3048,"date":"2015-12-14T09:51:52","date_gmt":"2015-12-14T09:51:52","guid":{"rendered":"http:\/\/progresomicrofinanzas.org\/?p=3048"},"modified":"2017-11-20T16:46:04","modified_gmt":"2017-11-20T16:46:04","slug":"controversial-law-regulating-the-use-of-credit-and-debit-cards-in-paraguay","status":"publish","type":"post","link":"https:\/\/www.fundacionmicrofinanzasbbva.org\/revistaprogreso\/en\/controversial-law-regulating-the-use-of-credit-and-debit-cards-in-paraguay\/","title":{"rendered":"Regulating the use of credit and debit cards"},"content":{"rendered":"
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On 25th<\/sup> September 2015 the law regulating the use of credit and debit cards in Paraguay came into force. The regulation aims to establish a set of requirements and conditions in the issue, contract and usage of credit and debit cards, with mandatory compliance for card issuers, operating companies and users themselves.<\/p>\n

The law establishes provisions for quality of service, duties of transparency and information and specifies the maximum limit on interest rates applicable to the use of credit cards (article 9 of the law).<\/p>\n

Interest ceiling <\/strong><\/h3>\n

According to the article cited, the interest that can be applied on credit card use may not be higher than triple the current average deposit rate as published monthly by the Central Bank of Paraguay (BCP), which would be roughly equivalent to\u00a018%*<\/sup><\/strong>. It is worth remembering that before the law came in to force, financial institutions tended to use what the BCP considers to be a usurious rate, of over 50%**<\/sup><\/strong>\u00a0as their reference for setting the applicable interest rate. This fixing of an \u201cinterest-rate ceiling\u201d has had consequences for the commercial strategies of the institutions involved, which in turn impacts user consumption patterns.<\/p>\n

Reactions to the law<\/strong><\/p>\n

The Banking Association of Paraguay (Asociaci\u00f3n de Bancos de Paraguay, ASOBAN) and the Association of Financial Institutions of Paraguay (Asociaci\u00f3n de Entidades Financieras del Paraguay, ADEFI) have informed users of credit cards in the financial system, merchants and the general public that (i) all the benefits, discounts and promotions that they have been enjoying through banks and financial institutions with participating merchants have been cancelled with immediate effect; (ii) transactions that exceed the credit available on the credit card will be automatically refused and (iii) anti-fraud insurance policies taken out before the law came into force will not be renewed once the policy expires, although new protection measures may be agreed upon.<\/p>\n

Likewise, ASOBAN and ADEFI member institutions report that they are required to take the following measures:<\/p>\n