Juan Carlos de León Aguirre. Card no. 202011252.

Section: L

Credit Card Law

Initiative presentation
Background
Tax impact
SIB Superintendence of Banks
Cardholders
Issuers
Contracts
Cost transparency
Interest Rate Cap
Debt restructuring
Culture of use
Affiliates
Criminal Instance
JM Monetary Board
Repeal
Validity

Scheme

Ley de Tarjetas de
Crédito

Presentación Tarjetahabientes Emisores Afiliados Instancia Penal

Antecedentes Contratos Tasas tope

Impacto Transparencia de
Tributario SIB JM
costos

Derogatoria Vigencia Reestructuración Cultura de Uso

Credit Card Law

Sentence Outline
Credit Card Law

1 The Presentation of the initiative of the Credit Card Law takes place in the plenary session of the
Congress of the Republic on April 10, two thousand and nineteen.
1.1 The Background exposed goes from its etymological origin to its arrival in our territory.
1.2 The Tax Impact is positive for the country in different economic aspects.
1.3 The Repeal contemplates a couple of articles that are the entirety of the current legal credit
card regime.
1.4 The Validity is stipulated six months after its publication in the official gazette.
2 Cardholders will be able to obtain the tools to be able to responsibly manage the line of credit
granted through a card.
2.1 The Contract must be easy to read and understand in addition to specifying the most
important conditions.
2.2 Issuing entities are obliged to guarantee cost transparency of the services they provide.
2.3 The cardholder will have the option to request debt restructuring if they consider it
necessary.
3 Credit card issuers manage to keep interest rates free of caps.
3.1 The capped rates, according to specialists and experience in other countries, have been more
harmful than beneficial for cardholders and issuers.
3.2 The Superintendency of Banks is appointed as the regulator and supervisor of economic
activity with credit cards and the Monetary Board is in charge of preparing the regulations
of said law.
3.3 The creation of a true culture of responsible conduct is the main objective of the
interventions authorized by the Superintendency of Banks.
4 Affiliates will have the legal guidelines to better perform their function.
5 The criminal court classifies crimes and sanctions.
 Credit Card Law

The Presentation of the initiative of the Credit Card Law took place in the plenary session of the Congress of the
Republic on April 10, two thousand and nineteen. The file with registration number 5544 begins its approach
with the presentation of the main reasons for requesting specific legislation that regulates the operations and
relationships that involve the use of credit cards.

The Background exposed goes from its etymological origin to its arrival in our territory. Etymologically
“credit” comes from the Latin word “trust”; It may well refer to the trust of the person who grants an asset and
the person who receives it with the promise of payment with interest. The antecedent most similar to the current
credit card appears in the United States in 1914. The first credit card arrived in Guatemala in the early 1960s.

The Tax Impact is positive for the country in different economic aspects. This is considered by several experts
in addition to the association of credit card issuers in Guatemala. A considerable percentage of consumption in
the country is carried out with the use of credit cards. This represents a guaranteed collection of VAT and at the
same time a valuable contribution to the formalization of the economy and greater transparency in financial
transactions. The Credit Card Users Association also considers it this way; but it emphasizes that said economic
well-being is not reflected in the vast majority of Guatemalans, economically dependent workers or members of
the informal economy.

The Repeal contemplates a couple of articles that are the entire current legal regime for credit cards. The
existing legal regulation dates back to 1970; It has clearly been left behind and insufficient, representing in
practice a legal vacuum. The Validity of this law is stipulated six months after its publication in the official
gazette. Only after being sanctioned by the President of the Republic.

Cardholders will be able to obtain the tools to be able to responsibly manage the line of credit granted through a
card. This law stipulates the creation of the financial protection unit of the Consumer Services Directorate,
which must implement a training program aimed at cardholders with the objective of making them aware of the
advantages and disadvantages of a credit card, the form of using it, rights and obligations, etc. Additionally,
when the issuer delivers the contract, it must attach a user guide.

The Contract must be easy to read and understand and specify the most important conditions. As well as the
credit limit, interest rate, commissions and other charges, theft, fraud or loss of the credit card. Among the most
outstanding points we can mention that the cardholder is no longer relegated to a position inferior to the issuer.
Issuing entities are obliged to guarantee cost transparency of the services they provide, strive to improve the
service and the transfer of information to cardholders. The cardholder will have the option to request debt
restructuring if they consider it necessary or to terminate the civil relationship whenever they wish.

Credit card issuers manage to keep interest rates free of caps. In the previous law, interest rate caps were set. It
is very likely that for this reason it was declared unconstitutional. Due to the rapid reaction of the private banks
that, six days after its promulgation, 14 files had already been filed against it in the constitutional court. The
capped rates, according to specialists and experience in other countries, have been more harmful than beneficial
for cardholders and issuers.

The Superintendency of Banks is appointed as the regulator and supervisor of economic activity with credit
cards and the Monetary Board is in charge of preparing the regulations of said law. This measure provides some
peace of mind to cardholders. The creation of a true culture of responsible conduct is the main objective of the
interventions authorized by the Superintendency of Banks.
Affiliates will have the legal guidelines to better perform their function. This law allows them to clearly
establish their situation and position vis-à-vis issuers, operators and cardholders, their rights and obligations.
One of your obligations will be not to restrict in any way people who make card payments. It also indicates the
minimum equipment and material that must be available for the efficient exercise of credit card transactions.

The criminal court classifies crimes and sanctions. It seeks to provide complete legislation that can provide
financial activities carried out with credit cards with the security and support that they currently require.
Included are the crimes of cloning credit cards, use of cloned cards, manipulation of data and information,
fraudulent use as well as the circumstances that aggravate them. The sanctions stipulate prison sentences of six
to ten years and fines between Q.50,000 and Q.500,000.

The Congress of the Republic, through the credit card bill, highlights that in the current environment it has
become an important payment instrument. Its widespread use makes it necessary to establish a legal framework
with a scheme that defines equality, rights and transparency in the relationships between issuers, cardholders
and affiliated establishments. One year after its presentation and having obtained a favorable opinion at the end
of last year, the future of this law remains uncertain.

Bibliography.

Congress of the republic. (s.f.). Credit Card Law Initiative. Retrieved April 26, 2020, from
https://www.congreso.gob.gt/assets/uploads/info_legislativo/iniciativas/1555088520_5544.pdf
Congress of the republic. (2019, December 2). COMMITTEES ISSUE FAVORABLE OPINION TO
INITIATIVE 5544 CREDIT CARD LAW. Retrieved May 4, 2020, from
https://www.congreso.gob.gt/noticias_congreso/3760/2019/3
Ortíz, I. (2016). Analysis of Decree 7-2015 of the Congress of the Republic of Guatemala, which approves the
law of
credit card, compared to current legislation and comparative law. Recovered from
https://recursosbiblio.url.gt/tesisjcem/2016/07/01/Ortiz-Ingrid.prf
Free Press. (2015, December 11). Effects of the Credit Card Law in Guatemala [Video file].
Retrieved from https://www.youtube.com/watch?v=erj_kPjhdL8&feature=youtu.be
Sandoval, G. (2011). Importance of reforming the Guatemalan Commercial Code to expand the
regulation in relation to the use and issuance of credit cards. Recovered from
http://bibliotecausac.edu.gt/tesis/04/04-9160.pdf