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January 31, 2023

Investors, bankers ask for commission levels to be reassessed or even postponed

Representatives of the Competition Council do not support the Ministry of Finance draft and argue inter-banking commissions are determined by agreement, and possibly, cartels.

The Ministry of Public Finance (MFP) has drafted an emergency ordinance draft restricting inter-banking commissions that card issuing banks request from the receiving banks, which help make payments to retailers through specific terminals, to 0.2 per cent for debit cards and 0.3 per cent for credit cards.
“In Romania, in accordance with the norms of the two card systems, the value of inter-banking commissions applicable to the national card payment market is determined by multilateral agreement reached between the banks that owned ca. 98 per cent of the domestic card market, and has the following structure: 0.5 per cent + RON 2.50 (EUR 0.58) for ATM transactions with commissions paid by the issuing bank to the purchasing bank (owner of the ATM), 1.00 per cent (standard), 1.50 per cent (e-commerce), and 0.7 per cent (oil) for POS transactions with commissions paid by the purchasing bank to the issuing bank,” the bill draft’s substantiation report shows.
“Let’s call a spade a spade – commissions between banks are determined by concluding various agreements, and possibly, through cartels. I say ‘possibly’ because it has not been proven yet,” Georgeta Fotino, Director of the Services Division of the Competition Council, stated at Thursday’s public debate organized at MFP headquarters on the draft which cuts back the amount of cash payments, hotnwes.ro informs. “Our experience with the banks started through threats. As it turns out, the collaboration with the Competition Council has had positive results, as well, because it allowed clients to switch banks. Perhaps everything should not be so rigid, since it is clear we will never know how the banking mechanism works better than them,” Fontino said further. In turn, major retailer representatives wish these commission reductions to be applied immediately, since the card market will be profitable for banks even without commissions.
Also present at the debate, Mihai Bogza, president of the Foreign Investors Council (FIC) and Chairman of the Board of Directors of Bancpost, strongly disagreed and stated Competition Council representatives should not make such statements without proof. “The proof is the agreement itself between the banks, and you should know,” Fotino replied. Bogza went on to say the draft was premature and not sufficiently justified, pointing out he would rather it was postponed until it was implemented as European directive. “We find it difficult to go through with a bill before the European draft is finalized and without an impact assessment on the various categories of parties involved and a transition period drastically reduced from two years to six months. (…) Banks will obviously pass any expenses forward, to the consumers. You know very well that banks have been in decline in the last two years and, in my opinion, we will surely witness a chain-like effect of banks on the consumers,” the banker explained. Florin Danescu, executive president of ARB, agreed with Mr. Bogza, saying loan institutions feel it is necessary to have consultations in order to assess the impact of costs on the customers. The banking community’s opinion will be relayed to the MFP by the end of the official public consultation period.
MasterCard: Higher usage fees, fewer investments
Representatives of MasterCard believe the reduction in inter-banking commissions for card transactions imposed by the bill draft could determine an increase in card holders’ usage fees and fewer investments from financial institutions in developing payment infrastructures, according to MasterCard.
“We welcome the authorities’ initiative to stimulate growth in the electronic payment method usage rate in Romania, but our main concern is to avoid burdening card holders with expenses. Based on our experience with different markets, retailers do not usually transfer benefits resulting from lower commissions to the final consumer through lower product prices, but there is an actual danger that the same consumers will end up paying more by using electronic payment methods,” Cosmin Vladimirescu, General Manager of MasterCard Romania and Moldova, stated in a press release.
Furthermore, Vladimirescu continued, lower revenues for financial institutions will have a direct impact in slowing down infrastructure investments and, thus, in preventing the development of electronic payment methods in Romania, which account for around 5 per cent of overall payments.
Catalin Cretu, Visa Europe for Romania Director, reiterated that authorities need to take into consideration and analyze all possible effects of such “a drastic and sudden” reduction of inter-banking commissions for card payments imposed by the bill, and ensure it will not negatively influence investments in payment and card usage technologies.
In conclusion, Dan Manolescu, Secretary of State for the Ministry of Public Finance, stated that following this debate the Government may reduce inter-banking commissions for retailer card payments in two stages.

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