Accepting ATH Móvil Payments Does Not Exempt Businesses from Needing POS Terminals
SAN JUAN – After a new amendment was made to the law, requiring businesses to offer customers at least two payment methods, and that one should be with a credit or debit card, the question of whether an electronic payment method, such as ATH Móvil, can be considered an alternative has been the subject of public discussion.
ATH Móvil is a free smartphone application by transaction processing company Evertec. The app is designed to transfer money instantly between accounts, making it possible to purchase goods and services. However, in the opinion of the bill’s author, the system cannot be considered a payment method that complies with the new legislation. Businesses are not prevented from accepting ATH Móvil payments, as long as they also have point of sale (POS) terminals to conduct transactions.
In a conversation with Caribbean Business, Popular Democratic Party (PDP) Sen. Luis Daniel Rivera Filomeno was emphatic in pointing out that although Act 46 of 2016 does not explicitly structure the payment processing mechanism, it does make it categorically easier for consumers to physically use a credit or debit card at all businesses whose sales exceed $50,000 a year.
“Businesses can include ATH Móvil as a first alternative, but the law expressly states in Article 1.1 that the second method has to be a credit or debit card. ATH Móvil is considered an electronic transaction, a money transfer, and therefore, it is not a debit or credit card,” bill author Rivera Filomeno said.
The senator added that the new legislation addresses the demands of consumers who “have stated they have no problems with using cards, but not everyone has a smartphone with ATH Móvil available.” Credit card use improves the capture rate of the 11.5% sales & use tax (IVU by its Spanish acronym) to generate revenue for the commonwealth.
“We did it this way because we have to remember that licensed professionals evaded the law established before and began to ask people for managers’ checks and money orders; they presented customers with the most expensive and most difficult alternatives to force them to pay in cash. What businesses want is to handle a lot of cash to report whatever they see fit and evade taxes, but this method shuts that door,” said the PDP lawmaker, who chairs the Senate’s Labor Relations, Consumer Affairs & Job Creation Committee.
Possible legal battle
In the event the law is challenged by businesses, using the argument that it imposes a costly burden on transactions, and in light of a possible lawsuit due to its vague language, Rivera was confident that the spirit of the law created to protect consumers will prevail in any litigation.
“That is a very technical way of trying to get away with it, but the law is very clear and says businesses must provide two payment methods, and one of them has to be a credit or debit card. A customer who does not have ATH Móvil but has a plastic ATM card cannot be denied his intention to pay as the law says, infringing on their right,” said the legislator, who noted that the Consumer Affairs Department’s 30-day term to submit its administrative regulation has already expired. Consumers can file a complaint with the police if they are not offered two payment methods in accordance with the new law.
The regulation is not finalized despite having an advance draft, written in conjunction with the Treasury Department. Therefore, administrative fines cannot be issued, but the law has a penal and judicial process that categorizes noncompliance as a misdemeanor. “Consumers need to know there is a judicial resource available and they must complain immediately,” Rivera said.
Article 3 of Act 42 of 2015 states that if a person is convicted for noncompliance regarding the new law, the first offense will result in a fine of no less than $500 and no greater than $3,000. A person will be fined no less than $5,000 and no more than $10,000 for subsequent offenses.