Law No 20.590 (the "Law"), that
authorizes the issuance and operation of pre-funded payment methods
or any other similar system (the "Prepaid
Cards"), by non-banking entities, when these systems
involve that the issuer or the operator regularly engages in
monetary obligations with the general public or to specific sectors
or groups thereof, was published and came in force on October 29,
Its main provisions are the following:
Requirements to incorporate Issuers or Operators
The non-banking Prepaid Card issuers or operators (the
"Issuers" and the
"Operators", respectively) must be
incorporated as special purpose corporations according to Law No
18.046, and their exclusive corporate purpose must be the issuance
or operation of Prepaid Cards. The Operators may also be
incorporated as bank supporting companies, according to the General
The Law also modifies Law No 18.772, empowering the Republic to
issue and to operate pre-funded payment methods, establishing a
special regulation applicable to Metro S.A. (the Santiago
Common rules to Issuers and Operators
Both are subject to the supervision of the Superintendence of
Banks and Financial Institutions
("SBIF") and both are required to report
to the Financial Analysis Unit (the Chilean AML entity), when
The Chilean Central Bank will dictate rules to set their
minimum operational requirements: paid up capital and minimum
reserves, liquidity, risk management and control, among
The Issuers can operate their own Prepaid Cards.
The requirement to have an exclusive corporate purpose shall
not prevent the entity from issuing or operating different types of
(i) Receipt of money from the public
The Issuers are empowered to receive money from the public,
which can only be used to:
Make payments for the use of the Prepaid Cards;
Charge the correspondent commissions;
Reimburse the funding received from the cardholder.
(ii) Applicable regime to the deposited money
The cardholders' money shall be accounted for and kept
segregated from any other operations performed by the Issuer. It
will not accrue interests or indexations in favor of the
These funds shall not be confiscated nor can be subjected to
injunction or any other ownership limitations arising from
obligations assumed by the Issuer different from those described in
The funds must be kept in the Issuer's account or be
invested in financial instruments authorized by the Chilean Central
The cardholder may redeem the funds at any time.
(iii) Prepaid Cards Issuance
The Issuers may issue Prepaid Cards either in a nominative form
or to the bearer, according to the following:
a) Nominative Prepaid Cards: They
can be issued without a determined term of validity. The funds that
the cardholder delivers to the Issuer are subject to expiration,
under Article 156 of the General Banking Act, which broadly states
that such sums must be transferred to the national treasury after 5
years of inactivity.
b) Prepaid Cards to the bearer: They
must always be issued with a term of validity. When this term
expires, the cardholder has a 6 month term to redeem the funds, and
if this does not occur, the Issuer must transfer the funds to the
Regional or Provincial Treasury of its main primary domicile.
(iv) Use of Prepaid Cards
The Law does not regulate the businesses in which the Prepaid
Cards can be used, or its national or international character, so
we expect that the Chilean Central Bank and the SBIF will clarify
this matter at a later date.
Despite these changes to the law, passengers' access to the
public transportation system shall continue to be regulated by the
Chilean Transport and Telecommunications Ministry.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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