Fintech Department Bulletin | Fintech Legal News in Argentina | Edition No. 14.
by Daniel Levi
In this bulletin, you will find a selection of the main legal news related to the fintech and digital banking market in Argentina.
Instant Payments “Transfers 3.0” Kicked-Off
Phase 1 will be implemented gradually
As originally scheduled in Communication “A” 7153 of the Central Bank of Argentina (BCRA), the implementation of Phase 1 of Transfers 3.0 started on December 7, 2020.
The tool has begun to operate on a limited basis, only with a few participants and merchants, and it is expected to be developed gradually. This was expressly meant in the first technical rule published by the Interbanking Commission of Payment Means of Argentina (CIMPRA), which is in charge of regulating the Standardized Interphase of Payments (IEP) that will support the model.
In its Bulletin 525, published on November 26, 2020, the CIMPRA issued a first “transition” version of technical rules for adapting the existing systems to the new one. This first phase establishes the first standards for payment calls and transfers by QR Code, upon ISO 20022 messaging standard. It is clarified that the transition process will be slow and for the long term. The next phases are scheduled for May 2021 and November 2021.
Clarifications on “Transfers 3.0” Due to Visa Claim
More freedom is recognized to participants and third parties
Just after the new instant payments system was approved, the news informed that Visa filed a formal complaint with the BCRA, claiming that the new model permitted the initiation of payments even with magnetic cards of third-party networks, whereas Visa never gave its authorization for the use of its intellectual property, which not only infringed its rights but also represented potential security risks for the processing of the transactions.
Upon this claim, on December 4, 2020, the BCRA published an interpretation in its section “Interpretations and Consultations”, in which it clarified that, on one side, the Transfer 3.0 system does not impose on the participants the mandatory use of magnetic cards of third-party networks, given that this would require a voluntary agreement with such third parties.
Secondly, the BCRA also clarified that there is no impediment for the third parties to agree on remuneration with the participants, provided that prices do not establish differentiation that may hinder competition.
Finally, the BCRA pointed out that the participants who provide the initiating accounts have the freedom to set forth the criteria for the authorization of the transactions, including the imposition of caps to the amounts operated. Even though this last clarification brough certain calm to the participating entities, it also raised certain concerns, wondering whether such limits could jeopardize the extensive use of the instant payments system.
The Federal Government presented the new National Strategy for Financial Inclusion
The former objectives are maintained, though now more focused on the vulnerable groups
As anticipated a few months ago, on December 2, 2020, the Federal Government presented the new National Strategy for Financial Inclusion (ENIF) for the period 2020-2023, which replaces the strategy approved by the former Administration by Resolution No. 17/2019.
Following the line of the former strategy, that was elaborated with the joint participation of the public and private sectors, in this case, the Government delegated the preparation of the strategy to the Coordination Council for Financial Inclusion, which is also composed of different areas of the State and participants of the private and third sectors (including the Fintech Chamber).
The report provides certain interesting data regarding the status of financial inclusion in the country: (i) 80.4% of the population has a bank account, though the 50% is only used to receive salaries and pension payments, (ii) there is a significant difference of quantity of salary accounts between men and women, (iii) payments with cards represent between 43 and 46% of electronic payments, and (iv) internet fix connectivity is still low in vulnerable groups.
The new strategy traces the following objectives: (1) amplify and improve the access to financial products and services; (2) potentiate the use of electronic means of payment and microcredits (including crowdfunding); (3) improve the financial capacity and protection of users; (4) promote the interoperability between the traditional financial system and the new payment platforms, and (5) reduce social gaps (including with respect to geographical reach and gender).
Finally, regarding the adoption of “open banking”, the new strategy keeps the idea of “empower clients to have the alternative to approve the disclosure of their history of payments and their credit records”, but in this case with the main purpose of improving the credit scoring of people with less access to credit.
Regulation of the new Law for the Promotion of Knowledge-Based Economy
It specifies the requirements for applying to the regime
Through Decree No. 1034/2020, dated December 20, 2020, the Executive Branch issued the first main regulation for the new Law No. 27,506 for the Promotion of the Knowledge-Based Economy.
The regulation specified the obligations in charge of the beneficiaries of the regime, in order to ensure the proportionality with respect to the benefits granted.
For more detail about this regulation, you may refer to the report published by our Tax Law Department.
It is worth mentioning that, on December 10, 2020, the City of Buenos Aires adhered to the federal regime, through the local Law No. 6394.
Bill of Law to Regulate Crypto Activities
Submitted by the official political party
By the end of 2020, a new bill of law aimed at regulating certain aspects of crypto activities entered the Federal Congress.
The bill of law was submitted on November 11, 2020, with the number 6055-D-2020, and was proposed by the bench of the official political party, so it is expected that it could have chances of being approved, though it received several critics from the industry.
The more relevant aspects of the draft are the following: (i) crypto-assets are defined as “digital representations of value”, assimilated to financial assets, instead of legal currency; (ii) as a consequence, the supervisory power of the activity is delegated to the National Securities Commission (CNV), while the BCRA and the Financial Information Unit are reserved with specific complementary intervention; (iii) persons operating with crypto-assets that hold third-party funds (i.e. exchanges’ wallets) must register with and obtain an authorization from the CNV; (iv) Initial Coin Offerings are expected to be regulated by the CNV, though certain safe harbor rules would be issued to be exempted from the regime; (v) exchanges are now considered “Obliged Subjects” for AML purposes; and (vi) a space of sandboxes may be created for trying new fintech initiatives (that may exceed crypto activities).
Even though certain journals announce that the opposition was going to submit its own bill of law, it has not been official filed yet.
Bills of Law to Replace the Data Protection Law
Could facilitate the adoption of open banking models
By the end of the year, two additional bills of law were submitted to the Federal Congress to replace the existing Data Protection Law No. 25,326 (2000).
On one side, on November 17, 2020, one of the opponents’ benches of the Chamber of Deputies submitted project 6234-D-2020, whereas, days after, certain senators of the official party submitted their project 2986-S-2020 in the Senate.
Both drafts have the main purpose of modernizing the current data protection rules (which have more than 20 years), so to make them compatible with the new technologies and the European GDPR.
Within the main amendments proposed by these bills, we highlight the following, because they may facilitate or bring more legal certainty for the development of open banking models in Argentina: (i) the protection now is limited to physical persons only (legal entities are no longer included), (ii) “legitimate interest” is introduced as legal basis for the recollection and treatment of personal data, as an alternative to the owner’s consent, (iii) the owner’s consent is expressly permitted to be obtained by electronic means or tacitly, (iv) the right to portability of data is introduced.
It is not possible to anticipate yet whether any of these drafts is going to be finally debated and/or approved, because in 2018 another bill was submitted but lost parliamentary status. However, given that in this case legislators of both official and opponent parties have presented pretty similar projects, there could be more optimism about the passing of the new law.
The Electronic Invoice is Introduced to the National Payments System
To facilitate its negotiation and judicial enforcement
Through Communication “A” 7219 dated February 5, 2021, the BCRA regulated certain operative aspects of the Electronic Invoices for SMEs, in order to facilitate their negotiation within the National Payments System.
Invoices that have been accepted and are totally or partially outstanding maybe now negotiated within an Open Circulation System (SCA), which will be managed by COELSA (the Electronic Clearing Chamber for Low Amounts). The use of the system will be free-of-charge, except for fees that the BCRA may expressly admit.
It is worth mentioning that, as it happens with ECHEQs, in the event that the system registers an outstanding invoice that becomes due, the financial entity of the beneficiary will issue a certificate for getting access to judicial enforcement.
ATM’s must admit access through digital print
Mandatory for banks but optional for clients.
Last January 22, 2021, the BCRA issued Communication “A” 7208, by means of which it obligates financial entities to incorporate in their ATMs (existing and future ones) biometric readers that may allow identification of users through digital prints. This tool, however, will be optional for clients.
Entities must enable this system in AMTs that already have this feature by June 30, 2021. It is expected that all AMTs can interoperate so that they grant access to accounts of any entity (by January 31, 2022). All ATMs in the country must provide this functionality by December 31, 2022.
Amendments to the Rules for Protection of Financial Users
They affect contracts entered through electronic means
By the beginning of 2021, the BCRA issued Communication “A” 7199, which introduced changes to the rules for Protection of Financial Users, mainly in connection with the provision of information in products and services hired through the Internet.
Among other things, financial entities, issuers of credit cards and non-financial credit providers (which include lending fintechs) must provide to their users a summary of the contract -before its formalization- highlighting the more relevant provisions for the user.
In this respect, through Communication “B” 12135 dated February 23, 2021, the BCRA specified the provisions that should be informed to the users in the corresponding summary.
Apart from that, when the contract is entered into through electronic means, entities must ensure that the user gives an express consent (non-tacit), and that it can read and download the terms and conditions of the product or service, which template must be always available for consultation in the institutional website.
Finally, in line with Resolution No. 424/2020 of the Secretary of Internal Commerce, entities are obligated to publish in their platforms, with evident visibility, links for “revoking button” and “termination button”, in order for users to revoke or terminate their agreements.
Flexibilization of Caps for Interest Rates on Credit Cards
Lower caps now only apply for balances up to AR$ 200,000
Section 16 of Credit Cards Law No. 25,065 sets forth that the interest rate over outstanding balances of credit cards (the so-called “revolving”) cannot exceed 25% above the interest rate applied by banks over unsecured personal loans. However, as it was informed in the past, by the end of 2019 the BCRA reduced such cap to banking issuers, which was set at first 55% p.a. and then at 43% p.a. (in Pesos).
By Communication “A” 7198 dated January 6, 2021, the BCRA started to eliminate those caps for balances above AR$200,000 so that any excess will only be subject to the original limitation of 25% above the interest rate applied over unsecured personal loans.
Limits to the closing of branches and to the appointment of correspondents
Might difficult partnerships with non-banking fintechs
Due to the reduction of the concurrence of the public to physical branches of banks during the pandemic, several banks started to close branches all over the country, in order to foster their digital channels instead. For this reason, through Communication “A” 7194 dated December 30, 2020, the BCRA established that, from that moment on, banking branches can only be closed with its prior authorization.
On the other hand, in a measure that could be seen as contradictory with the one above, the BCRA sets forth, through Communication “A” 7182 dated December 17, 2020, that as from such date banks must also count with BCRA’s prior authorization for the appointment of correspondent agencies, who so far only needed to be informed. Apart from turning this appointment more bureaucratic (possibly due to the banking union’s claims), this new measure might difficult the creation of new “white-label” initiatives between banks and non-banking fintechs that were being designed through the use of this outsourcing figure.
Implementation of Phase 2-a of ECHEQs
It was accelerated due to the pandemic
Given the increase in the use of this electronic instrument during the pandemic, on December 14, 2020, the CIMPRA issued its Bulletin 526, which defined certain technical rules for the implementation of Phase 2-a of ECHEQs.
The new features enabled by this new phase are: (i) the electronic guarantee of the ECHEQ by a third party, (ii) the mandate for collection, custody, negotiation, and discount, and (iii) the cancellation or crossing of endorsements.
In addition, the CIMPRA unified the issuance and template of the certificate for the judicial foreclosure of ECHEQs.
Postponement of the SIRTAC tax collection system
It will simplify the withholding of Turnover Tax for electronic payments
The General Resolution No. 2/2019 of the Arbitration Commission in charge of the Multilateral Agreement that regulates the distribution of the Turnover Tax among the different provincial jurisdictions of the country, created a System for Collection over Credit and Purchase Cards (SIRTAC), aiming at simplifying and unifying the periodic tax settlement and collection over payments corresponding to credit and purchase cards, as well as for electronic payments through aggregators and payment facilitators’ platforms.
Even though the system was expected to start operating by the end of 2020, General Resolution No. 16/2020, Disposition No. 7/2020 and Disposition No. 1/2021 postponed the effect until January 4, 2021, March 1, 2021 and April 1, 2021, except for certain entities that already started to operate through it. Up to now, 16 of 24 provincial jurisdictions adhered to the SIRTAC, though it is expected that more of them will be incorporated in the near future.
Gender policy for financial marketing
The promotion of stereotypes is prohibited.
In line with one of the objectives of the new National Strategy for Financial Inclusion, on November 12, 2020, the BCRA issued Communication “A” 7162, in which it set forth that financial entities, issuers of cards and non-financial providers of credit (which include lending fintechs) must avoid, in their marketing material and publicity, practices or actions that reflect or promote stereotyped or dominant visions of gender, androcentrism, sexist language, mediatic and/or symbolic violence against women and LGBTTIQ+ people.
Among others, the rule establishes that the following practices must be avoided: male condescending visions -such as “mansplaining”- or using women’s image as a mere object detached from the product that is promoted or associated with stereotyped behavior, or reproduce homophobic, lesbophobic and transphobic messages.
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This bulletin contains summaries of standards that are published and to which we refer. They are in no way complete or imply legal advice. If you require legal advice, please contact us.