What the IMF Gets Wrong About Costa Rica’s Payment-Card Caps
The Asamblea Legislativa de la República de Costa Rica (Costa Rica’s legislature) moved in 2020 to empower the Banco Central de Costa Rica (BCCR), the nation’s central bank, to impose price controls on fees charged by both payment-card issuers and acquirers.
I have written previously about the perverse effects these price controls can generate (here, here, and here), and was thus intrigued to see that the International Monetary Fund (IMF) included a related assessment of payment-card fees as part of a background paper on the Costa Rican economy.
In this post, I review the implementation of price controls on the merchant-discount rate (MDR) and interchange fees in Costa Rica, as well as their likely effects. I then review the IMF’s analysis and offer some constructive criticism.