Fintech Law, why care?

August 19, 2018

In recent years, the financial and banking sector has evolved in the field of technology, leaving behind traditional financial institutions. This evolution is – to a large extent – thanks to the Internet and the enormous day-to-day adoption of mobile electronic devices, in such a way that the panorama is being opened up to new competencies that aim to reach a maximum financial placement by its users to their innovative platforms; these institutions that exploit the transformation of technology to provide financial services are called “Fintech” or in other words: Financial Technology Institutions.

Currently it is considered that there are three types of Institutions:

    • Those that try to compete directly with other established financial institutions.
    • Those whose main purpose is to ally with established financial institutions to launch a product or service.
    • Those that provide their services to improve some link in the value chain of a financial institution.

Only in Mexico an estimated 160 to 200 organizations linked to the development of financial technologies are estimated to work, according to the Secretaría de Hacienda y Crédito Público (SHCP) ) each organization has more than 540 thousand active users, which have received more than one billion pesos in credits, these organizations have achieved a great impact in our country and this makes it one of the most valuable markets in the sector in America Latina.

By virtue of the foregoing and foreseeing a promising future, the past March 1st of the current year, the Congress approved Law to Regulate Financial Technology Institutions, better known as The Fintech Law, which focuses on three main areas:

      • Electronic payments.
      • Collective financing.
      • Virtual assets.

What is the purpose of the Law?

Mainly, regular companies / collective microfinance organizations – also known as” crowdfunding “-, to the currencies virtual (Bitcoin, Ethereum, etc.) and electronic capital used as investments. The Fintech law in principle aims to combat the laundering of money and irregularities that could be exploited by organized crime, thus promoting protection and confidence in users who use financial technology service platforms; it will also allow to make investments or receive credits at more attractive and accessible rates, thus obtaining better returns in the first and more attractive rates in the latter.

“This law clarifies the legal situation of some companies, which previously operated not illegal, but neither was their operation explicitly legal. . “ Eduardo Guraieb

In turn, the Fintech Law will amend other laws, such as the Credit Institutions Law, the Securities Market Law, and the General Law of Auxiliary Credit Organizations and Activities.

Thanks to the approval of this Law, online transactions can be made without leaving home to go to the bank and make lines, the process of collections / payments, opening of accounts, consultations and claims will be streamlined online, so in just five minutes you can start receiving payments with a credit or debit card in your establishment with just a couple of screens for the entry of your data and perhaps some proof of identity.

With this law, small and medium companies will be able to benefit from the regulation that allows them access to more than five billion pesos per year, and on the other hand, Mexico would be securing a position as a focus of financial innovation in Latin America.

As a professional, business owner or entrepreneur we invite you not to lose sight of the new options with which Information Technologies can make your economic activity a boost in an increasingly interconnected Mexico.

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