Reduced Transaction Fees Aim to Aid Small Businesses

Teh Central Bank of Paraguay (BCP) has announced a reduction in credit and debit card transaction fees, set to take effect on July 1, 2025.Credit card fees will be capped at 4%, while debit card fees will be lowered to 3%. This move is primarily aimed at benefiting micro, small, and medium-sized enterprises (MSMEs) across the country, with expectations of improved profit margins.

This decision comes at a time when MSMEs are facing economic headwinds. According to recent data from the Ministry of Industry and Commerce, small business revenue growth has slowed by 15% in the last quarter, highlighting the need for measures to stimulate economic activity.

MSME Federation Applauds the Decision,Calls for Further Action

Luis Tavella,president of the Federation of MSMEs of Paraguay,has voiced strong support for the BCP’s decision,describing it as fantastic. He emphasized that the reduction has been a long-standing request from the sector. Tavella anticipates a notably positive impact on sectors like gastronomy, where card transactions are prevalent.

We consider “fantastic” the decision of the matrix bank. The sector had been requesting this reduction for a long time.

Luis Tavella, President of the Federation of MSMEs of Paraguay

However, Tavella also noted that the measure ideally should have been implemented sooner, suggesting April or May, to address the current economic slowdown. Consumption has been withdrawn since November last year, there is little circulating and unusual inflation. This reduction helps, even if we woudl have preferred to apply before, he stated.

Beyond Fee Reduction: Addressing Systemic Banking Challenges

While the reduction in commission fees is welcomed, Tavella argues that it alone will not solve the underlying issues hindering formalization and banking access for MSMEs. He points to bureaucratic hurdles as a notable obstacle.

The banking problem is not solved by lowering a point in the card commission. The real obstacle is in access to the financial system, where MSMEs face too manny bureaucratic obstacles to open accounts or access credits.

Luis Tavella, President of the Federation of MSMEs of Paraguay

Many MSMEs are forced to operate using personal accounts due to the difficulties in opening business accounts, especially for entities like limited liability societies (SRL) or companies for simplified actions (EAS). This practice, according to Tavella, fosters informality and unstructured income management.

Call for Collaboration and Regulatory Action

Tavella stresses the need for collaborative efforts between the BCP,the Association of Banks of paraguay (Asoban),and the MSME sector to streamline banking access and promote formalization. He also highlights the importance of implementing the MSME law, approved in December 2024, which is currently awaiting regulation.

The implementation of this law, according to Tavella, could significantly reduce administrative costs and provide tax incentives, fostering greater growth within the sector. If we make the president sign the regulation in March, the law will enter into force in April and will facilitate the formalization of thousands of small businesses, he explained.