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Retail Associations denounce DACO payment methods ruling

By on September 8, 2016

SAN JUAN – About a dozen trade organizations protested at the United Retailers Association (CUD by its Spanish initials) headquarters against a new ruling by the Consumer Affairs Department (DACO by its Spanish acronym) to amend Act 46 of 2016 about payment methods at businesses.

The group indicated that the ruling, which it claims contains stricter dispositions than the very law from which it emanates, would limit available and globally known payment methods, and it constitutes a move away from the Gov. Alejandro García Padilla administration’s discourse of making local commerce a solution to the economic debacle the island is suffering.

Among the opposers were members of the Chamber of Food Marketing, Industry & Distribution (MIDA by its Spanish acronym), the Gasoline Retailers Association, the Ice Industry Association, the Inspection Center Association, the Pharmaceutical Industry Association, and Coopharma, among others.

The mayor objection the businessmen presented was the limitation to use credit and debit cards through a point of sale (POS), categorically discarding other electronic payment methods. This, they said, not only contradicts Act 46, but also counters the federal statutes that acknowledge the use of electronic methods as available payment methods for the businessperson and the consumer.

The group pointed out that the “imposition” benefits two transaction-processing companies on the island: Evertec and Softech.

“The Ruling interferes in business determinations because it limits the conditions in the acceptance of payment methods, allowed practice in federal statutes. It doesn’t recognize the right to require a minimum purchase quantity for debit card use. This has a severe impact, especially in ‘PyMes’ [small and midsize businesses] with minimum earnings margins in sectors such as food, gasoline and inspection sectors, to name a few,” said Nelson Ramírez, CUD president and principal spokesman of the group.

He added that “in these cases, these businesses would be exposed to an imminent and significant transactions loss, since in some purchases, the processing cost may be higher than the product’s earnings. We emphasize that the law, in none of its dispositions, imposes that the use of a card as only payment method must be exclusively in physical form and through a POS. It doesn’t prohibit the use of cards through electronic methods, either.”

Likewise, Idalia Bonilla, president of the Community Pharmacy Association, worried about the transactions registry required by the ruling, which must be preserved for six years.

MIAMI - MAY 20:  Yera Dominguez receives a credit card from a customer for payment at Lorenzo's Italian Market on May 20, 2009 in Miami, Florida. Members of Congress today passed a bill placing new restrictions on companies that issues credit. The vote follows the Senate passage of the bill, which now heads for President Obama's promised signature. The bill will curb sudden interest rate increases and hidden fees, requiring card companies to tell customers of rate increases 45 days in advance. It will also make it harder for people aged below 21 to be issued credit cards.  (Photo by Joe Raedle/Getty Images)

 (Photo by Joe Raedle/Getty Images)

“That imposition duplicates processes and requirement contrary to the public policy of this administration, which has made efforts to simplify the ease of doing business on the island. The business sector already registers all its sales in the Treasury’s terminal. We don’t see a reason for the requirement of another sector when this information is accessible in the terminals for the IVU [Spanish acronym for sales and use tax], accounting books, financial statements and informative annual business payrolls,” Bonilla said.

For his part, Coopharma Director Heriberto Ortiz brought attention to the requirement of having 50% of the POS’s for card processing, even when the law does not demand a specific number or percentage.

“The Act is clear; it states that the business must have two available payment methods, from which one must be through a credit or debit card. The number of POS’s for card processing is a business determination that each establishment should evaluate, parting from its economic situation. The law recognizes it as such, however, via ruling that it is limiting said prerogative. It is important to highlight that acquiring and maintaining a POS is costly. It involves equipment costs, Internet services, maintenance and processing charges for each effected transaction,” assured Ortiz.

The group also called attention to the fact that the ruling doesn’t exclude transactions where the business acts as an intermediary, such as the case of the payment processing of electricity and water bills, lottery, among others.

The businesspeople urged DACO to adjust the ruling and evaluate the technical amendments that the association groups recently submitted, so their implementation does not bring forth a price hike and that the businesspeople may comply with the law thoroughly, “without applying restrictions that affect Puerto Rico’s way of doing business.”

The recommendations to the regulation submitted by the business organizations to DACO were backed by the Small Business Advocate’s Office, the entity responsible for ensuring the compliance of government agencies with Act 454 of 2000 for administrative flexibility and for which all government agencies must comply with when regulations are enacted.

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