After 14 appeals filed, the Guatemalan Constitutional Court declared unconstitutional the law that attempted to regulate the credit card market in the country.
The Credit Card Law became effective on March 8th, 2016, however, after the business chambers, card issuers and the Bank of Guatemala filed legal appeals before the Constitutional Court (CC), it was provisionally suspended on March 31st of the same year.
The Superior Court has ordered the temporary cancellation due to lack of a ruling from the Bank of Guatemala, and the fact that Congress gave approval without having a majority, as stipulated by law.
The Constitutional Court (CC) has provisionally suspended the Credit Card Act, which came into force on March 8. Gloria Porras, president of the CC, told Prensalibre.com that one of the major failings was that Congress did not pass the Law with 105 votes, which is defined as a majority.
The appeal filed against the law establishing ceilings on interest rates charged by card issuers has been rejected by the Constitutional Court.
The Constitutional Court (CC), rejected the appeals filed against the Credit Card Act , presented in January by the Association of Banks of Guatemala (ABG), the Association of Card Payment Issuers (AEMPG) and Deputy Ronald Arango, reported Republica.com.gt.
Unconstitutionality lawsuits filed by banks and the Association of Payment Card Issuers may postpone the enforcement of the law, which was scheduled for March 2015.
The actions claiming unconstitutionality argue that when approving the controversial law, Congress did not follow the relevant processes, including the inclusion of the opinion of the Monetary Board on the part of representatives.
Issuers have objected in particular to the cap on interest that can be charged, citing an increased credit risk and a reduction in the number of cardholders.
An article on Lahora.gt reports that "... Roberto Fuentes, of the Association of Credit Card Issuers of Guatemala (AEMPG), said the Credit Card Act does not have the technical basis necessary to actually have a positive effect on users.
The new law will prevent usury and harassment of users, but will also affect consumers and business activity by leaving at least 500,000 Guatemalans without access to this payment method.
Decree 7-2015 of the Law on Credit Cards, approved by the Guatemalan Congress will come into force in three months time and will put a cap on interest rates that can be charged by card issuers, the procedures used to collect from defaulters, but at the same time will limit access to an important method of payment.