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The Central Bank of Costa Rica (BCCR) has introduced a new legal framework, with staggered implementation dates from February 20, 2025 onwards, aimed at improving efficiency, security and affordability of Costa Rica’s payment cards. Key aspects of the framework include caps on fees for local and cross-border payment transactions.
For local transactions, issuers can charge a maximum interchange fee of 1 percent, while acquiring commissions are capped at 1.95 percent. Specific sectors, such as transportation and charitable organisations, benefit from reduced fees of 1.50 percent, and for cross-border transactions, the maximum interchange fee is 1 percent, and acquiring commissions are limited to 2.50 percent, with similar exemptions applying.
The regulation also mandates the adoption of international standards, such as EMV standards, contactless payments and IBANs for all new cards.
Issuers are also required to bring in robust customer authentication methods, involving at least two independent factors out of knowledge, possession and/or inherence, echoing the rules introduced by the EU and UK with strong customer authentication (SCA).
Meanwhile, issuers will need to ensure transparent claims processes for issues such as theft and fraud, while interoperability between ATMs and point-of-sale (POS) systems, particularly concerning American Express, is required by July 2025, with further measures extending to ATMs by January 2026.
Fee transparency is emphasised in the new regulation, with card brands required to publicly disclose their fee structures and notify stakeholders of any changes.
Non-transaction-related fees, such as POS terminal rentals, are capped at CRC14,000 ($27) per month, with additional charges allowed for card-not-present transactions using anti-fraud services.
The bigger picture
What Costa Rica appears to be doing here is implementing a framework that brings it up to standard with international frameworks for cards and liability.
For example, the new rules stipulate transparency for card fees, as seen in jurisdictions such as the EU, the UK and the US.
In Europe, for example, interchange fee rates must be disclosed; this is similar to the situation in the US and Singapore, although compliance requirements are less stringent in those jurisdictions.
Why should you care?
As has been intended with comparable regulations elsewhere, such as the Durbin Amendment in the US and interchange fee caps in jurisdictions like the EU and UK, these regulations have clear beneficiaries: merchants.
This is due to lower acquiring fees and interchange costs, which could enhance profitability, especially for small businesses and exempt sectors such as transportation and charities.
However, compliance with anti-fraud measures for card-not-present transactions may require investment in upgraded systems for merchants, offsetting some of the benefits.
Issuers, meanwhile, take the brunt of the impact from the regulations and face significant changes to their status quo.
Fee caps for local and cross-border transactions will reduce revenue, particularly for issuers reliant on higher fees to fund rewards programmes or consumer benefits.
In addition, complying with advanced standards such as EMV, contactless payments and IBAN integration will require substantial investment in technology and card issuance for firms that have not yet done so.
Issuers are also required to implement authentication protocols, which will undoubtedly increase both operational complexity and costs for rollout.
The regulation also requires streamlined claims processes for issues such as fraud and theft, demanding infrastructure upgrades and expanded staffing due to the emphasis on increased customer protections.
Lower interchange fees, although beneficial for merchants, ultimately threaten revenue streams, especially for premium card products.
Compliance costs for system upgrades and reissuing cards could be a burden for smaller issuers, and fee caps and interoperability requirements increase competition, eroding advantages for dominant players.
American Express also faces new interoperability requirements for ATMs and POS systems, which could also increase operational costs to achieve compliance.
However, these changes may enhance Amex's market accessibility and usability, positioning it more competitively alongside international card schemes such as Visa and Mastercard.
Fee caps on interchange and acquiring fees may also reduce revenue for Visa and Mastercard, particularly in segments previously characterised by higher fees.
Despite all these issues, mandatory interoperability and advanced technology standards could drive increased transaction volumes, potentially reducing the problems with revenue losses and supporting long-term growth in the country.
