Earlier today, a joint agreement to reduce credit and debit processing costs was realized between credit companies, including Visa Argentina, the Government, and the Chamber of Commerce (CAC). Over four years time, credit processing fees for businesses will fall from 3 percent, to 2.5 percent and finally to 1.8 percent. Debit charges will follow a similar path, falling from 1.5 percent, to 1.2 percent and finally to 0.8 percent.
The changes come amidst pending legislation to reduce processing fees, with hopes of creating a more competitive credit market in Argentina. Currently, stores can process one type of card— instead of accepting competitive cards. When choosing which card to process, many stores select Mastercard over Visa, as Visa is owned by banks through a company called Prisma.
Prisma is currently under investigation by the Defense Commission of Competition (CNDC), under claims of their anti-competitive effects in the market. The company will likely be sold within the year, but in the meantime lowered Visa processing fees may encourage greater Visa acceptance, and thus competition.
Thanks to the “Transparent Prices” program, which took effect in February, stores are required to display cash versus credit costs of items in the store. Despite the law’s effects caused a 4.1 percent decrease in sales compared to February last year — although that could also have to do with the recession the country has been going through — prices are not anticipated to decrease much for credit consumers after processing fees decline.
According to Esteban Greco, leader of the CNDC, “It is an error to only look at the final cost. The competition should do its job.” Overtime, then, lowered prices and competitive card acceptance will likely grow. As this is a four year plan, change will come slowly.