In a unanimous vote on Wednesday, Mexico’s Chamber of Deputies passed an amendment to the Consumer Protection Law that prohibits commissions on purchases made with a credit card or debit card.
Lawmakers in the lower house of Congress voted 446-0 to approve the bill, which now moves to the Senate for consideration.
The legislation not only bans the application of commissions but also establishes penalties for any business that issues a charge against consumers that use a credit card or debit card.
A statement issued by the Chamber of Deputies following the vote stated that the government agency responsible for consumer protection in the financial sector, Condusef, has detected that some commercial establishments impose commissions or charges that range from 3% to 5% more than the total value of the purchase or service if payment is made via a credit or debit card.
This practice violates the agreement forged between businesses and financial institutions regarding point-of-sale terminals. The accord states that businesses should not transfer excessive fees to consumers.
The bill heading to Mexico’s senate amends Article 7 of the Consumer Protection Law by inserting the following language:
“Those who provide goods, products or services are prohibited from charging commissions, fees, additional charges or the equivalent to consumers who use debit cards, credit cards or other protocols as a method of payment.”
“Other protocols” refers to checks, electronic transfers and preauthorized credit card charges.
Should the bill become law, fines of between 701 pesos (US $42) to 2.2 million pesos (US $136,000) could be applied to offenders.
National Action Party (PAN) Deputy René Figueroa Reyes told the newspaper Proceso that the reform is a step toward “eliminating the corrosive practice” that many businesses engage in to make customers believe it is more costly to pay electronically than with cash.
Consumers should be assured that they need not pay extra fees every time they use their credit cards, Figueroa said, adding that the reform will allow more equitable access to financial services and result in greater financial inclusion for the public at large.
With reports from El Economista, Proceso and Reforma
Long time coming. its the cost of doing business.
Excellent. The companies which engage in this practice of asking customers to pay their fees to use credit cards are violating their contract. These companies are just common thieves.Walk out of their stores.
Costco is a big offender of this. Hope it passes.
Sorry, I come at this from the other direction. Visa/MasterCard have jacked up their fees continuously, and the rates are higher because of the big Bonus Points come-ons to attract new cardholders. (Guilty as charged–my Chase Sapphire’s 60,000-point bonus.) In countries like the USA that prohibit dual pricing, the retailer has to cover those off-the-top costs by increasing the prices paid by everyone, while only some cardholders get the benefits. Costco is actually very fair: they post the two prices right on the shelf, and do not charge it if you use their branded Visa. Moral: it’s very much a two-edged sword.
If you have a Mexico Costco membership can you still get the Costco Visa and use it to save CC fees at Fostco Mexico?
This question is probably moot as I suspect this bill will pass easily.
I think Costco goes around this by essentially offering a lower price for cash and would say using their card is like paying cash. That is how some businesses go around this in the US. Instead of a fee for credit card usage they offer a discount for cash (or debit) payment with the price of service or item at the higher price (taking into account the credit card fees).
What about if they are charging you in dollars instead of pesos? I thought it was illegal in Mexico to charge in dollars (at least on the mainland)? The practice we have seen here is now the credit card terminals are doing a exchange rate conversion (at a horrible rate) and charging a foreign credit card in dollars. The businesses are saying they have no control of this. Anyone have insight on this?
Mexican businesses absolutely have control of this. In Mexico, businesses can offer customers a US dollar exchange rate OF THEIR CHOOSING as a ‘convenience’ (to you) … I’ve seen absurd rate “offerings” as low as 14-1 and 12-1, and it’s been happening much more often since last December as inflation, the super peso, and the super economy have left local restaurants (at least near me) super empty. Thus, business owners who are hungry to pick up extra money from unsuspecting tourists and not-fully-informed consumers, simply adjust their credit card machines by way of a simple setting choice and thus manipulate what you’re charged–for your ‘convenience.’ It’s legal, but so is your ability to stop it by way of a few simple things that have ALWAYS worked for me:
1. As you hand your card to a waiter or salesperson, advise them that yours is an international card and that you request that your card be charged in pesos, not dollars.
2. If they refuse or claim they can’t change the setting, that things are out of their control and blame what’s happening on the bank, say, “I’m only paying in pesos,” and sign your receipt: “will only pay in pesos, as advised the (waiter/salesperson).” DO NOT SIGN YOUR NAME. If you sign your name, you will lose what happens next:
3. Once you’re home (or the next morning), call your credit card’s international toll free fraud number and tell them what happened. They will look up the exchange rate you should have been charged and adjust your charge to the amount you should have been charged.
Your credit card company will then contact the local business and advise them to stop doing this and if the problem persists, they’ll take away their ability to charge anyone in any currency, because they’re committing fraud once you ask to be charged in pesos and you’re told they can’t do it. They can. In fairness to waiters and salespeople, they very well may have NO IDEA about all this. (Look how many customers and tourists don’t know!) But business owners know well. Trust me: 1 or 2 calls from VISA to the business will stop this.
Good luck.
Unfortunately credit and fees are a major issue for locals in Mexico. Coppel, Elektra and all these large companies are more interested in selling the credit versus the motorcycle.
And why would anyone with a house in Mexico shop at a Costco?
there’s always a larger return on the proceeds from a loan, yes? especially with the interest rates here – when my friend showed me his statement from elektra i was appalled – wow – i was also shocked the first time i needed to use my card for a large purchase at boxito and they tacked on 3% – i should have declined the sale but it was urgent – needless to say i haven’t been back since
Businesses have an easy solution. Raise all prices and give a 3% discount when paid with cash.