"It is not possible for us to find out through the media before you," was the complaint that the Central Bank heard from fintech after iProUP reported exclusively that the monetary agency will launch a series of measures to regulate the sector.
Although the telephone was not stopped ringing in the Reconquista building 266 from several firms asking for explanations, the BCRA will hold on Thursday a new board meeting in which the following measures will be specified:
1- Prohibit the transfer of money from the CVU (Uniform Virtual Account) from a legal entity to another CVU. They can only turn it into a bank account.
2- The money that is in the virtual wallets must be deposited in a bank checking account, so that the balance is liquid and is not invested by the fintech to obtain own profits
3- Define what fintech can do so that its operation is not considered financial intermediation: that is, it does not use user deposits to offer loans
4- Increase controls to detect possible cases of undercover financial intermediation, which would violate the Financial Entities law
In this way, the body that has been conducting Miguel Pesce for less than a month is fighting the first confrontation with a sector that grew steadily in the last two years.
"We have an scheduled meeting with the Central Bank, which will take place in the next few days. We know that they are analyzing measures, because we have seen it in the media. But we believe that there should be no decisions until we speak," says Juan iProUP Pablo Bruzzo, president of the Argentine Chamber Fintech.
Without saying so, the manager still hopes that the same will not happen as with the countryside when the Government increased the retentions to agricultural exports behind the backs of the ruralists. Although, as iProUP knew exclusively, the draft only lacks the signature.
Lack of dialogue
The main Fintech executives of the country regret that the Central Bank has not consulted with the industry the possibility of any regulation, although they remain cautious until the measures are officially announced.
The administration of Mauricio Macri had advanced in filing the asymmetries between the Fintech and the banks. In fact, the AFIP had taken a first step 10 days before the change of government, forcing virtual wallets to be VAT and Earnings withholding agents. New measures were expected, some started several months ago, but they were expected to be consulted.
Therefore, the latest news was interpreted as a slight by many companies in the sector, who expected some prior after having conversations with the Front of All during the campaign and until a first informal meeting with representatives of the Government with other technology companies.
"We share many issues, but you have to work on the details. There are activities that are ambiguous, so from the camera we bet on reaching 'safe ports', to explain and clarify them," says Bruzzo.
According to the manager, the industry "agrees that the means of payment, the increase in the tax base and the symmetry with the banking system should benefit." But shoot: "Every time you double click on those topics, it requires conversations."
For its part, the local executive of a multinational fintech, which demanded to keep its name in reserve, also regrets that the BCRA has "cut itself", without an instance of dialogue with fintech.
"Until a few decades ago, the central banker of any country was the most skilled person in the market. Today, with such a changing industry, it doesn't happen anymore," he emphasizes, without hiding his anger over what he considers a "stab in the back." of the Government, but also "a false step".
According to his analysis, "that today the learning of the Table of Innovation is not taken advantage of, that consisted of sitting down with the industry, posing a problem and seeing what the leaders of the sector recommended, is a delirium".
The manager adds that England, the most advanced country in the field, "does not have a regulator for everything", but "the Open Banking project required a specific working group". At this point, he criticizes that the monetary authority has not even designated a BCRA interlocutor, as Lucas Llach was until 2018.
"If the Central Bank does not dialogue with fintech, it does not realize that it is an open, collaborative and willing to share knowledge industry, we will lose the third place in Latin America that we are fighting with Colombia today. And also investments," he warns.
Telescopic sight
"Before doing something with the CVU, they should finish what the previous management started: allow the interoperability of the CVU," complains a Fintech executive who asked for the off-the-record.
Currently, Mercado Pago users cannot send money to accounts with CVUs of other companies, although they can be sent to banks. Some attribute it to an abuse of its dominant position (Ualá does allow transfers to other wallets), although the unicorn claims to be working alongside Citibank as an integrating bank and Coelsa as a clearing house to add the function.
Precisely, this "closed" environment resulted in the Central Bank transfers putting the magnifying glass on the QR payments of Mercado Pago and deciding on Thursday that legal persons cannot turn the funds to another CVU, but to a bank account.
The platform already has more than 400,000 businesses attached and processed transactions for $ 16 million since its launch. Your billing grows double digits every month.
What is in the sights of the Government is that merchants - for example, self-services - accept payments and the balance is then available to buy from attached wholesalers, pay for services and buy other goods. All out of reach of the BCRA or the AFIP.
Although this closes the much-cited electronic money circuit - avoiding costs for transporting flows, but also delays in the cash line of shops and even cash theft -, the truth is that it has an extra advantage for businesses: no the tax is applied to credits and debits in bank accounts.
This tax, known as Check Tax, is 1.2% of the transaction and the third in importance for tax collection. In November, AFIP's latest data, meant almost $ 36,000 million; behind VAT ($ 142.6 billion) and Earnings ($ 88.6 billion).
"It seems to me very well that progress is being made in the attempt to avoid tax evasion (in this case, circumvention, because it is by legal means), although this should be in the hands of the AFIP," Ignacio E. Carballo, director, tells iProUP of the Program in Fintech & Digital Banking of the UCA.
For their part, from the unicorn they prefer not to make statements before the iProUP consultation. They are waiting for the monetary agency to finally put the new rules of the game alive.
The point where everyone agrees
The major controls to detect whether or not fintech incurred financial intermediation is the measure that generates less criticism within the package prepared by the BCRA and published exclusively by iProUP.
"We always said that when a company takes deposits and lends them without being a bank, it is breaking the law," says Bruzzo, who is also CEO of the Moni credit company.
At this point, Carballo agrees and believes "fundamental" that progress is made in this, because "this was the most relevant doubt that was left unresolved entirely in the management of Macri."
"From my position, we must look for a new definition of Financial Intermediation: there are many gray areas in new financial technology companies that raise funds and give loans," he remarks.
However, he points out that "this is just being discussed in international forums, there is no global consensus and therefore it may be rushed for Argentina to redefine it," but "it is correct that at least controls are applied under the traditional concept."
Carballo also considers positive the greater control for companies that "without informing the client, put the savings in an investment fund, which is a gray area, in which one could say that there is no intermediation."
From Ualá they emphasize to iProUP that this would not be a problem for their operation. "The user has two balances in the application: without investing and available for operations and invested in the Common Investment Fund."
Again, the measure seems to be tailored to the unicorn: in your wallet, both the money to spend and the money invested are part of a single balance.
"If the regulator understood, one could sit down to chat with Mercado Libre in particular, as has happened in other places in the world with large players. In fact, the company today provides information to the Central Bank," an important executive of the sector whose curriculum contains more than one fintech.
Meanwhile, the industry is preparing to have that first formal meeting with the central staff of the Central Bank. They hope to avoid the adoption of regulations that take their foot off the accelerator and thus maintain their growth, which was 70% in the number of new companies last year.
The idea will be to shuffle and give again. According to Bruzzo, "the first thing will be to introduce ourselves as a camera and talk about the most important points. It is essential for any regulator to meet new players and business models, and discuss the necessary regulations."
