Name
Global FinTech Guide
Country _ Name
Costa Rica
SectionTitle
Loan services/factoring/loan broking/finetrading
Body
FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find 'peer-to-peer'; (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.

Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.

As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.

Introduction

Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services

Costa Rica maintains a receptive and favorable attitude towards loan-giving, factoring, brokerage, finetrading, and ancillary financial services. The country boasts a robust financial system regulated by entities such as the Central Bank and the General Superintendence of Financial Entities (SUGEF), ensuring transparency and security in financial transactions. Government support for financial sector development and diversification further underlines the country's commitment to economic growth and support for businesses and entrepreneurs. The presence of specialized factoring companies and online lending platforms reflects Costa Rica's openness to financial technology adoption and innovation.

Legal affairs

Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above

Chapter II of the Factoring Act establishes a framework of minimum requirements to be considered when signing a factoring contract, such as the attributions and obligations of the factor and the transferor, the presumption of authenticity of signatures on commercial invoices, and the forms of transmission of invoices and other rights of credit and collection.

Additionally, Chapter III regulates the alternative use of electronic means for procedures for the transmission of credit and collection rights, present and/or future. The concept of 'electronic factoring platform' is introduced, which consists of a computer system aimed at automating the assignments of credit rights in favour of factors, through a standardised electronic form. All legal acts that are going to be carried out within this type of platform must be signed by means of a certified digital signature.

Private entities wanting to implement electronic factoring platforms must comply with all the operating specifications contained in Chapter III of the law, relating to the integrity and inalterability of information, storage and custody of information, and duty of confidentiality and probity. In addition, they must obtain authorisation from the Ministry of Science, Technology and Telecommunications (MICITT) so that the platform can operate.

Finally, this law repeals article 984 (e) of the Commercial Code, which provided that actions derived from commercial sales would be time-barred within one (1) year. With this repeal, these types of actions will now have a limitation period of four (4) years instead of one (1) year, and therefore the debts of credit buyers will expire in four (4) years.

Additional comments regarding the legal situation for loan-giving-, factoring-, brokerage, finetrading-, and ancillary services or what FinTech’s must be aware of in this business area

N/A

Economic conditions

Market size for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services and biggest companies in this business area

Since the FinTech industry is new to the country, we only have records of FinTechs in general.

In the FinTech Radar of Costa Rica, 61 FinTechs were identified, but it is recognised that it is necessary to add others, since many initiatives are not sufficiently visible yet.

In Costa Rica, this sector saw a significant growth of 24.4% according to the 2023 Fintech Ecosystem of Central America and the Caribbean, rising from 49 fintech companies in 2022 to 61 the previous year. The payment segment leads nationally with 26%, followed by financial software with 19%, credits with 10%, cryptocurrencies with 8%, and digital banking, insurtech, and trading each with 1%.Costa Rica also stands out for having one of the best communication channels between innovators and regulatory authorities.Apart from the relationship of some with local chains and businesses for purchase financing, several FinTechs are spin offs of financial institutions and others already provide solutions to banks and other entities. Some use the platform of the National Electronic Payments System (SINPE) of the Central Bank of Costa Rica, the Visa and Mastercard card brands or the license of a third party. Among them: Pei, Multimoney Biz, Kash, Toroso, Wink, Zunify and Monis.

Impesa, for example, provides services to six financial institutions in Costa Rica, including Banco Popular y de Desarrollo Comunal, Banco Nacional de Costa Rica, Cafsa, Lysto, Banco Lafise, Davivienda and Coopemep. This FinTech developed a card control tool called Monibyte for financial institutions and companies and a version of a mobile app to make payments between people with cards from any bank and in real time, among many more functionalities.

Impesa also designed a platform called Kipo that helps individuals and companies move funds from PayPal to dollar accounts in Costa Rican financial institutions.

Masterzon, a platform for negotiating invoices and contracts, among others, also developed a platform for currency exchange that is currently in operation in Coopeservidores

Additional comments regarding the economic situation for loan-giving-, factoring-, brokerage-, finetrading- and ancillary services or what FinTech’s must be aware of in this business area

N/A

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