Circular 8/2018 — Modifications to Circular 3/2012 (Foreign Currency Charges with Debit Cards)

Wednesday, July 18, 2018 OFFICIAL GAZETTE (First Section) 103 BANCO DE MEXICO CIRCULAR 8/2018 addressed to Credit Institutions and the National Agricultural, Rural, Forestry and Fisheries Development Financial Institution, regarding Modifications to Circular 3/2012 (Foreign Currency Charges with Debit Cards).

At the margin a logo, which says: Banco de México.

CIRCULAR 8/2018 TO CREDIT INSTITUTIONS AND THE NATIONAL AGRICULTURAL, RURAL, FORESTRY AND FISHERIES DEVELOPMENT FINANCIAL INSTITUTION: SUBJECT: MODIFICATIONS TO CIRCULAR 3/2012 (FOREIGN CURRENCY CHARGES WITH DEBIT CARDS).

The Bank of Mexico, with the purpose of continuing to promote the sound development of the financial system and protect the interests of the public, has determined to standardize the practice followed in the market, so as to provide certainty to debit card users who carry out foreign currency transactions with them. To this end, it is convenient to establish for entities that issue debit cards a regime that regulates the foreign exchange operations that such entities carry out to settle those payments and cash withdrawals in foreign currency that are executed with said cards.

For the above, based on Articles 28, sixth and seventh paragraphs, of the Political Constitution of the United Mexican States, 24, 26, 32 and 35, of the Bank of Mexico Law, 22 of the Law for Transparency and Ordering of Financial Services, 4, first paragraph, 8, fourth and seventh paragraphs, 10, first paragraph, 12, first paragraph in relation to 20, fraction XI, 14 Bis, first paragraph, in relation to 17, fraction I, 14 Bis 1, first paragraph, in relation to 25 Bis 1, fraction IV, of the Internal Regulations of the Bank of Mexico, which grant it the authority to issue provisions through the General Directorate of Payment Operations and Systems, General Directorate of Financial System Affairs and General Legal Directorate, respectively, as well as Second, fractions I, VI and X, of the Agreement on the Attachment of Administrative Units of the Bank of Mexico, it has resolved to modify Article 19 of the "Applicable Provisions to the operations of credit institutions and the National Agricultural, Rural, Forestry and Fisheries Development Financial Institution", contained in Circular 3/2012, to read as follows:

APPLICABLE PROVISIONS TO THE OPERATIONS OF CREDIT INSTITUTIONS AND OF THE NATIONAL AGRICULTURAL, RURAL, FORESTRY AND FISHERIES DEVELOPMENT FINANCIAL INSTITUTION Use of debit cards

"Article 19.- Debit cards may be used to withdraw cash at branches of the Issuing Institution, at ATMs, through banking commissionaires, at affiliated businesses; to pay for goods, services, credits and taxes, as well as to make other payments that Institutions allow their customers.

In the contracts that Institutions enter into with third parties for the processing of card payments, they must allow them the option to accept as a means of payment for the goods and services they offer: I. Only debit cards; II. Only credit cards, or III. Debit cards and credit cards.

Debit cards may be for use exclusively within national territory, or for use within national territory and abroad.

Charges for payments or cash withdrawals made in foreign currency with the debit card must be recorded in the respective Deposit Account, invariably, in national currency.

The charge that the issuing Institution of the debit card makes in accordance with the provisions of the previous paragraph must be equivalent to the amount resulting from the foreign exchange operation corresponding to convert to national currency the amount of the respective payment or cash withdrawal made with the debit card. In this case, to carry out the aforementioned foreign exchange operation, regarding amounts denominated in Dollars, the amount in pesos that the issuing Institution may charge in the Deposit Account may not exceed the product of multiplying the following factors: a) the amount of the payment or withdrawal in said foreign currency, and b) the result of multiplying by 1.005 the applicable exchange rate.

For the purposes of the case indicated in the previous paragraph, the applicable exchange rate will be that determined by the Bank of Mexico, in accordance with Title Three, Chapter V, of these Provisions, which it makes known on the same day it determines it, through its internet page, as the "FIX exchange rate" which, in turn, is published in the Official Gazette of the Federation on the next Banking Business Day, and which corresponds to the last available on said internet page at the moment the issuing Institution: i) has authorized the respective payment or withdrawal, or ii) must settle the amounts corresponding to said charge in accordance with the agreements entered into for this purpose with the acquirer, the clearing house or the recipient of the respective payment, as applicable, in the case of operations where the account holder authorizes, preliminarily, an initial charge and subsequently, a final charge for the same operation that implies the update of the previously authorized preliminary amount.

In the event that the payment or cash withdrawal with a debit card is made in a foreign currency other than the Dollar, the charge that the issuing Institution makes in national currency in the respective Deposit Account may not exceed the amount resulting from the following calculation: in the first place, the equivalent of the amount of the payment or withdrawal in the respective foreign currency to Dollars will be calculated in accordance with the last exchange rate available at the time corresponding in accordance with the provisions of sub-paragraphs i) or ii) of the previous paragraph, which has been made known by an authorized price provider to organize and operate with such character by the National Banking and Securities Commission in accordance with the provisions of the Securities Market Law, as it has been published on the respective internet page of said provider, and in the second place, the amount equivalent to pesos of said amount in Dollars will be calculated, in accordance with the indication in the previous paragraph.

In the event that the price provider contracted by the Institution in question does not make known the applicable exchange rate for the foreign currency in which a payment or cash withdrawal with a debit card is made, said Institution may use the market exchange rate made known by any company that does not have the status of a related party, in terms of Article 73, fractions I, V and VII, of the Credit Institutions Law. In this case, the Institution must keep a record of the source from which it obtained the exchange rate referred to in this paragraph.

Institutions may request from the Bank of Mexico, through the General Directorate of Authorizations, Consultations and Legal Control, through computer systems or any other means, including electronic ones determined by the Bank of Mexico itself, their authorization to carry out the foreign exchange operation referred to in this article by applying: a) the corresponding exchange rate at a time different from those provided for in sub-paragraphs i) and ii) of the sixth paragraph of this same article, or b) an exchange rate of the foreign currency in question, other than the Dollar, which is not made known by any price provider provided for in this article.

The Institution that presents the request referred to in the previous paragraph must attach to it sufficient evidence regarding the operational reasons that justify said request, as well as the elements that support its convenience for users. Likewise, the issuing Institution that obtains the indicated authorization must make known to its account holders, in accordance with the procedure referred to in said authorization, the application of the corresponding exchange rate, as well as carry out the modifications to the contracts under which it issues the cards in question. For these purposes, the issuing Institution must include in its authorization request its proposal for the aforementioned procedure."

TRANSITORY SINGLE. This Circular will enter into force one hundred and eighty (180) banking days following the date of its publication in the Official Gazette of the Federation.

Mexico City, July 12, 2018.- The General Director of Operations and Payment Systems, Jaime José Cortina Morfín.- Rubric.- The General Legal Director, Luis Urrutia Corral.- Rubric.- The General Director of Financial System Affairs, Jesús Alán Elizondo Flores.- Rubric.

Wednesday, July 18, 2018 OFFICIAL GAZETTE (First Section) 105 For any inquiries regarding the content of this Circular, please contact the General Directorate of Authorizations, Consultations and Legal Control, at telephone numbers (55) 5237-2308, (55) 5237-2317 or (55) 5237-2000 Ext. 3200.