RICO’S Q — In Costa Rica, the debate between using card payments (debit or credit card) and cash for everyday transactions goes beyond convenience—it’s about sustainability and the future of the country’s economy.
As digital payments gain traction, understanding how card payments compare to cash flow in supporting Costa Rica’s sustainable growth is crucial for businesses and consumers alike.
This post dives into the impact of these payment methods on financial transparency and economic resilience.
In Costa Rica, whenever a purchase is made using a debit or credit card at any business, merchants—whether individuals or companies—face numerous withholdings and deductions from the transaction.
This makes it difficult for them to maintain a steady cash flow.
Right now, Value Added Tax (IVA – impuesto al valor agregado) withholdings take about 5.31% of the total sale, and income tax (impuesto sobre la renta) withholdings add another 1.76%.
On top of that, banks charge transaction fees around 1.95%, not counting financing deals like installment plans, which can have rates as high as 15%. Online sales often come with even higher fees.
Putting it all together, a merchant accepting card payments might end up with roughly 10% less than the sale price. If customers use installment plans, that loss can grow to 20%.
Because of this, many businesses prefer to accept cash or payments through SINPE Móvil, but this approach risks attracting scrutiny from agencies like the Consumer Protection Agency under the Ministry of Economy, Industry, and Commerce (MEIC).
Meanwhile, Costa Rica’s Central Bank is actively working to ensure that acquiring fees match the country’s commercial and competitive realities.
Finance teams have a crucial role in navigating these rules carefully to keep cash flow balanced and healthy. It’s also important to know that the law allows businesses to ask the Tax Administration to reduce IVA withholdings, sometimes even down to zero, if certain criteria are met.
Since IVA and Renta withholdings are essentially advance tax payments, regulations also allow for refunds when it’s clear that compensation won’t happen.
Beyond taxes, negotiating bank fees is a key strategy for companies looking to boost liquidity and maintain strong financial health.
If you’re planning to visit Costa Rica or even live here, one thing you should know upfront is that many local markets, small shops, and even some restaurants still don’t accept card payments, despite the global shift towards cashless transactions.
Visitors to Costa Rica often get caught off guard by this, which and lead to inconvenience or unexpected hassles. Locals, on the other hand, usually know to check first with small shops if they accept card payments.
At my shop, La Pizza by Pizza Pizza in downtown Santa Ana, we get this question all the time—new customers asking if we take cards before they buy anything. We even have a sticker on our front window showing all the cards we accept, but they still ask.
It’s the same story at the Sunday Santa Ana market (from 5 am to 1 pm), where we make fresh-baked pizza to eat in or take home, as well as by the slice. Most locals check first if we accept cards, while tourists just assume we do. And yeah, we do accept cards, though we’re one of the few vendors that do. Most stands clearly display the Sinpe Móvil payment option.
For me, even with the fees and holds mentioned earlier, taking cards is essential. It’s easier for customers, but more importantly, it keeps me safer since I don’t have cash around. Accepting cards is a big part of how I handle transactions, but not everyone realizes that.
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