Since the early 1970s, credit card transactions in Guatemala have been regulated by one article in the Commerce Code. This has led to self-regulation in the credit card market. In 2013, in an attempt to adequately regulate the market, three bills were presented to Congress. However, since then, all three bills have been locked away without much thought.
In November 2015, after almost three years, Congress approved the Credit Card Act (Ley de Tarjetas de Crédito). It did so through an expedited process after Congress decided that approving the legislation was a matter of national urgency. This much-debated legislation came into effect in Guatemala on March 8 2016.
The Credit Card Act contains some game-changing provisions which issuers, as well as certain political, financial, and economic players in Guatemala, believe will have a negative effect on the economy. Among other things, the new legislation sets ceilings on interest rates and requires issuers to restructure their debts mandatorily and under unfavourable conditions.
In addition, Congress did not seek feedback from the Monetary Board, the entity responsible for Guatemala's credit policy, when it was formulating the law. This has raised major concerns regarding the impact the legislation will have on national financial policy.
Since the Credit Card Act came into effect, 13 actions have been filed in Guatemala's Constitutional Court requesting that it be declared unconstitutional and, as such, expelled from the country's legal system.
Although it is not yet known how the Constitutional Court will rule, it is clear that this controversial law will continue to generate unrest in Guatemala's economy and financial system.