Superintendencia de Industria y Comercio

The Superintendence of Industry and Commerce (SIC), in its role as National Authority for Competition Protection, imposed precautionary measures on VISA (VISA COLOMBIA and VISA COLOMBIA SUPPORT SERVICES) and MASTERCARD (MASTERCARD COLOMBIA ADMINISTRADORA and MASTERCARD COLOMBIA ICN SUCURSAL COLOMBIANA) for the possible commission of restrictive practices within the framework of the payment system in foreign trade, through credit and debit cards. 

The case: 

• Traditionally, payments for goods or services offered abroad by credit or debit cards are made through the "Cross Border" model, which uses the international payment networks of card franchises, commonly VISA and MASTERCARD. In this system, buyers must have a credit or debit card authorized by their issuing bank to make international purchases, applying high exchange rates. Additionally, transactions are paid in foreign currency and banks automatically defer payments to 24 or 36 installments. 
• For five (5) years, a new alternative model to the “Cross Border” system has been implemented, which is the “Local Withholding Agent” (LCA). Under this new system, agents create local entities in each country that directly connect foreign merchants with local payment systems and consumers.  
• Local agents under the LCA system transfer the resources received to foreign businesses without the need for the use and intermediation of card franchise networks, which would be a less expensive model. 
• VISA and MASTERCARD would be carrying out actions to block, eliminate or make the LCA model more expensive in several Latin American countries (Chile, Argentina, Peru and Colombia). On the one hand, they would have sent letters and communications to the banks in Colombia pointing out a possible breach of their conditions by allowing the LCA model and threatening the imposition of periodic and successive fines, as well as the revocation of the card licenses. 
• Likewise, VISA and MASTERCARD would have proposed to the acquiring banks that the transactions of the LCA model can only be processed through two programs created by these franchises. These programs would allow the use of the LCA model, but with the application of higher fees and costs. 
• The programs created by VISA and MASTERCARD would come into operation in Colombia between July and September 2022, which would mean an increase in fees in LCA model transactions that would range between 700% and 1000%, increasing the prices of goods and services offered by foreign electronic businesses. 

Precautionary measures 

• Do not impose or implement any rule, program or measure that prohibits or restricts the economic activity carried out by agents in the LCA model in Colombia. 
• Immediately suspend any type of communication, claim or threat against the companies that carry out the acquisition activity in Colombia to prevent them from continuing to contract with agents that offer the LCA model in Colombia.