Official: How the BCRA’s new installment system affects digital-wallet and bank borrowers

People who took out digital loans and have fallen behind on payments now have a new way to regularize their accounts. The mechanism uses scheduled debits and is designed not to accumulate the high rates often charged by lenders offering these loans.

The Central Bank of Argentina, or BCRA, put the system into operation on Monday, Aug. 31. It seeks to make money movements between the parties more transparent while creating more balanced competition between banks and digital wallets.

The instrument is called Cobro con Transferencia, or CCT. It enables lenders to collect loan installments through immediate transfers in a secure and transparent way. The BCRA says the system “seeks to offer a modern and improved solution, with a rigorous focus on fraud prevention.”

The design draws on similar mechanisms in other countries, including automatic Pix in Brazil, AutoPay in India and PayTo in Australia. Although the BCRA announced the system in March, it required lending institutions to make it available to the public by the final day of August.

The tool is aimed at reducing the cost of irregular payments, a problem for non-bank lenders and consumers whose credit becomes more expensive after they fall into arrears. It schedules immediate transfers to settle installments and includes safeguards for fraud prevention and user protection.

The BCRA also hopes that lower bad-debt risk could eventually affect interest rates. Non-financial credit providers currently charge twice the rates offered by banks, and a reduction in their risk margins could give them room to lower rates. The system also seeks to bring greater order and predictability to a financial environment where delinquency has grown, in part because some lenders applied loose standards when assessing prospective borrowers.

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seeks to offer a modern and improved solution, with a rigorous focus on fraud prevention.