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Chilean Competition Court issued specific regulations for the Card Payment Market

18 / 08 / 2022

The Chilean Competition Court (“TDLC”) ruled this week on a procedure that sets rules to improve its the conditions of competition in the market of credit, debit and prepaid card payment systems (“Instrucciones de Carácter General N° 5/2002” or “ICG N° 5”).

The ICG N°5 included most of the recommendations made by the Chilean National Economic Prosecutor’s Office (“FNE”) in the procedure Rol NC 474-2020, launched in September of 2020 by the TDLC, after several cases related to this market and identifying flaws in its operation.

During the procedure, the FNE warned about the existence of anticompetitive risks in the market and requested, as measures to promote competition and prevent anticompetitive behaviour, to establish limitations to the commercial rules and conditions established by the Card Brands (such as Visa and Mastercard). In addition, the Prosecutor’s Office requested to establish regulations in the relationships between the acquiring operators (such as Transbank, GetNet and Klap), the Payment Services Providers (PSP) and merchants affiliated with those card payment systems.

In ICG N° 5, the TDLC recognized the dominant position held by Visa and Mastercard in the card payment market and ordered specific modifications to their commercial rules and practices, substantively adopting the recommendations made by the FNE. The most relevant modifications include:

a) Sets deadlines for the full implementation of interoperability between Acquirers and Issuers, specifically in relation to the interconnection with card brands, implementation of transaction security protocols and installment payment methods.

b) Orders to remove or modify, as appropriate for each Brand, rules related to restrictions on licensing of acquirers, and it establishes that the interchange fees they set must be made public.

c) As an temporary measure, Card Brands may not prevent merchants from applying differentiated prices or surcharges for card payments, that does not exceed the commission paid (merchant discount) for each card transaction, in a public and transparent manner. This temporary rule will be in effect until regulated interchange fees are in force and comply with the merchant indifference test (“tourist test”).

d) Establishes that Card Brands may not impose joint acceptance of all their products, allowing that each merchant may choose the type of card it will accept when affiliated with that Brand.

h) Forbids any rule that may require a PSP to transfer the merchants they affiliate to the acquirer to which they are connected, if exceeding a certain threshold of value, number of transactions or any other similar criteria, and orders that the regulations established by the Central Bank must be applied in this matter.

i) Indicates that Card Brands must adapt their definitions and rules on cross-border transactions to the regulations issued by the Central Bank.

j) Orders Card Brands to periodically report to the FNE regarding charges related to cross-border transactions and brand fees, and to justify their modifications.

k) Regulates the deadlines and justifications that Card Brands must consider to unilaterally modify their contracts, rules and standards required of those who participate in their payment card systems.

l) Establishes the conditions under which Card Brands may apply sanctioning processes to their licensees.

m) Orders that interchange fees must be published in the web pages of each Brand, in full detail.

Regarding the relationship between Acquirers and PSP, the TDLC ordered to implement limitations and safeguards to the flow of strategic information that the former receive from the latter regarding affiliated secondary merchants, as well as to have a precise catalogue of essential information that may be required from a PSP to safeguard the security of the payment system. In addition, it was recommended to establish criteria of proportionality and objectivity in the collaterals or capital requirements that an Acquirer may require from a PSP.

Finally, regarding the relationship of Acquirers and PSP with merchants, the TDLC established the obligation to disclose in detail to merchants all the costs involved in the transactions made by them with payment cards. Also, in line with the Supreme Court’s recent ruling on the tariff system proposed by Transbank (Case No. 82.422-2021), the TDLC recommended, as complementary measures to those adopted in this resolution, the need to issue a regulation on the Brand Costs that card brands may set, incorporate PSP within the sectorial regulatory scope of the Chilean Financial Market Commission, and broaden the scope of activities allowed to the Sociedades de Apoyo al Giro Bancario (SAG) like Transbank and GetNet.


See ICG N° 5.