Background and Relevance of BBVA Mexico
BBVA Mexico, a prominent financial institution in Mexico, has raised concerns regarding the proposed capping of interchange fees by the Bank of Mexico and the National Banking and Securities Commission (CNBV). Carlos Serrano, BBVA Mexico’s Chief Economist, presented the bank’s perspective during the Situación Banca report presentation.
BBVA Mexico supports greater financial inclusion and competition; however, they view the proposed measure as problematic and counterproductive. The institution argues that the suggested cap on interchange fees equates to price control, which may not benefit merchants or consumers and could discourage investment from card issuers.
Current Payment Network Dynamics
Currently, merchants can process debit or credit card transactions through point-of-sale terminals (TPVs) provided by banks or other entities (adquirents), for which they pay a fee. Adquirents, in turn, pay an interchange fee to card issuing banks or other players for each transaction.
- Merchants use TPV’s to accept card payments, paying a fee to adquirents.
- Adquirents pay an interchange fee to card issuers for each transaction.
- The proposed regulation aims to fix the interchange fee at 0.3% for debit transactions and 0.6% for credit transactions.
Serrano emphasized that the fixed interchange fee could lead to lower merchant fees for adquirents, without any guarantee from the regulation. He also pointed out that optimal interchange rates vary over time, depending on market demand.
Potential Negative Impacts
BBVA Mexico’s Chief Economist, Alfonso Gurza, acknowledged that the payment network rule reforms generally align with positive objectives such as ensuring interoperability among networks and promoting competition. These reforms also address fraud prevention, liquidation guarantees, operational continuity, and technological updates.
However, Gurza highlighted that imposing significant caps on interchange fees could negatively affect market development. He stressed that this measure contradicts the federal government’s efforts to include and digitalize payments and the economy.
Key Questions and Answers
- What is the main concern of BBVA Mexico regarding the proposed capping of interchange fees? BBVA Mexico views this as a form of price control that may not benefit merchants or consumers and could discourage investment from card issuers.
- What are the current dynamics of payment networks in Mexico? Merchants use TPV’s to accept card payments, paying a fee to adquirents. Adquirents pay an interchange fee to card issuers for each transaction.
- What is the proposed change to interchange fees, and why does BBVA Mexico oppose it? The Bank of Mexico and CNBV propose capping interchange fees at 0.3% for debit transactions and 0.6% for credit transactions. BBVA Mexico argues that this equates to price control, which may not benefit merchants or consumers and could discourage investment from card issuers.
- How might this proposed change impact market development? BBVA Mexico’s Chief Economist, Alfonso Gurza, believes that imposing significant caps on interchange fees could negatively affect market development and contradict the federal government’s efforts to include and digitalize payments and the economy.
