Press Release C. 49-09
El Salvador, November 12th, 2009.
CS Issued Recommendations to the Draft of the
Credit Cards System Law
The Board of Directors (BD) of the Competition Superintendence (CS) issued
recommendations to the Legislative Assembly with respect to the draft of the Credit Cards
System Law which is being studied by said Assembly, in order to promote competition and
benefit consumers.
“The recommendations The BD of the CS delivered last Tuesday recommendations regarding the draft of
issued to the Legislative the Credit Cards System Law, which is currently under study in the Financial
Assembly are Commission of the Legislative Commission. Amongst said recommendations figure
determinant in order to the following: publish the exchange rates between issuer and acquirer; insure
have a law that companies the freedom to differentiate prices to the consumer, depending on the
promotes competition in payment means used; and eliminate the top or maximum interest rates from the
the market, increases draft.
economic efficiency, as
well as consumer Article 14 letter l) of the Competition Law empowers the BD of the CS to: “Issue, at
welfare”, asserted Jose the request of a third party or ex-officio, opinions on drafts of laws, ordinances, or
Enrique Argumedo, regulations which might significantly limit, restrict, or impede competition”.
Chairman of the BD of
About the recommendations
the CS.
The BD of the CS issued the following recommendations to the Legislative
Assembly of the Republic:
A. Include in Articles 21, 24 letter h), and 60 of the aforementioned draft, the duty to make public the
services commissions associated to the credit cards.
In order to promote competition in the issuance market, the publication of the commissions in the issuers´
establishments, in the account statements, and in nationwide newspapers is deemed necessary to be included in
Articles 21, 24 letter h), and 60 of the above cited draft, since pursuant to Article 2 of said draft they are charges
conceptually different to interest rates and to penalties, and these are currently published.
B. Include in the draft, a provision that empowers the Central Reserve Bank of El Salvador to request
from the economic agents who participate in the credit cards market, information on exchange rates
applied to domestic transactions. The above in order to make them available to affiliated companies
and to the public in general. With this, more information on negotiations limits to discount rates
would be made available, making the market transparent and promoting competition.
If negotiation could be made possible with this information to obtain lower discount rates, the cost saving benefits
to the affiliated companies could be transferred to the consumer in lower final prices.
Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador.
E-mail: contacto@sc.gob.sv - www.sc.gob.sv

It is important to mention that in other countries like the United States of America, the exchange rates for
domestic transactions, determined by Visa and MasterCard, are available in the franchises´ web sites; the
aforementioned has been their voluntary decision. It has not been imposed by regulations or court orders but has
been the result of the pressure derived from different judicial processes against the franchises and investigations
carried out by the Department of Justice and by the Federal trade Commission of the United States of America,
which have analyzed certain aspects of the credit card market, amongst them, the exchange rates.
C. Evaluate the recognition of the affiliated companies´ right to establish differentiated prices according
to the means of payment, considering the benefits said possibility could generate in the market.
The purpose of the above is that consumers who use means of payment different than credit cards (checks and
cash) do not have to pay the costs the affiliated company has to incur into for accepting cards and, consequently,
may be offered lower prices in their purchases.
D. Eliminate from the draft of the Credit Cards System Law, the top or maximum effective interest rates
to be charged on owed amounts for the use of credit cards, taking into account that the
aforementioned could generate a negative effect on this market´s competition and, above all, on the
consumer.
The establishment of top or maximum prices for these services leads economic agents who participate in the
market to fix their prices to that maximum price, adapting a unique price for all competitors.
In addition, the above cited situation may motivate that issuers have to pay costs above the determined
maximums and, thus, may not be able to render their services, especially to the segment of riskier customers who
present the highest interest rates in the market, leaving them without access to said market as a result of the
supply reduction, having to look for other financing alternatives for consumption: other credits offered by the
financial system, the informal sector, or loan sharking, which offer considerably higher rates than those offered by
financial intermediates.
Edificio Madreselva, 1er Nivel, Calzada El Almendro y 1ª Ave. El Espino, Urb. Madreselva, Antiguo Cuscatlán, El Salvador.
E-mail: contacto@sc.gob.sv - www.sc.gob.sv