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Monday, May 27, 2013

UPDATE - The conclusions of the Romanian Competition Council in the market enquiry regarding the payments by card should be released this week

UPDATE - The report can be read at the internet address (Romanian only, for the time being)

The Romanian Competition Council is expected to release this week the conclusions of a most awaited enquiry - that in respect of the market for payment services by card - having as prominent players VISA, MasterCard and the banks.  The enquiry has been launched in February 2011 and sought to clarify, mainly, a) how the commissions and fees for the issuance and acceptance of cards are set, b) the structure and the concentration of the payment cards systems and c) which are the rules adopted by the payment systems and the acquiring banks and their likely impact on the consumers and the traders.  Romania is not a leader but rather a follower in what looks as a very hot topic for the market players and the compettion authorities in Europe and elswhere.

In deed, the issues surrounding the payment systems managed by VISA and MasterCard are high on the agenda of the European Commission, with a focus on the Multilateral Interchange Fees (or "MIF"), which are the fees paid by the bank which issued the card to the bank through which payment is accepted (in principle, the bank of the merchant).  There are two problems in respect of the MIFs - the fact that they are set collectively by the members of VISA and MasterCard and their level, which was considered by the European Commission as being too high.  In a decision issued in 2007 and addressed to MasterCard the European Commission decided to prohibit, all together, the use of MIFs by MasterCard and the banks which are part of this payment system (the General Court upheld the Commission decision in May 2012).  In a similar investigation, VISA preferred to propose commitments and to make its MIF's cheaper and more transparent.  Some Member States decided to open separate investigations in respect of the MIFs applied in the domestic transactions and several resulted in finding of an infringement and in the application of fines.  

The most recent developments in this area include the opening of a new investigation regarding certain practices and rules of MasterCard, essentially in respect of payments made by cardholders from non Member Countries, in the European Economic Area or the "honor all cards" rule, and the acceptance by the European Commission of a new set of commitments made by VISA, which consist essentially in capping the MIF at 0,3% of the transaction.
Currently, the Commission is conducting a market study in 10 Member Countries (Romania is not included in the study), commissioned to Deloitte Consulting, in order to assess the costs of the merchants in processing payments by card or by cash. 
The competition issues surrounding the payment systems have a long history and although the investigations started over time by the European Commission paid off (the fees are today much lower than two decades ago, which brought effective benefits to the consumers as long as the number of the transactions increased considerably in this period), the saga does not seem to be over yet. The "hot potato" remains the interchange fees and it would be interesting to see what the Romanian Competition Council will say in this respect.  
A first opportunity to discuss the report of the Romanian Competition Council "whilst is hot" may be the conference Mediafax talks about Banking, which will take place this Thursday, 31 May 2013 at Radisson Blue.

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