Lower interchange fees for card payments

The interchange fees (fees that banks charge shops whenever a customer uses a credit/debit card to make a purchase) have been reduced by 2.2 percent, from the earlier 0.5 and 0.6 percent.

According to the new law, banks are ordered to reduce their interchange fees by up to four times.

The Law on Multilateral Interchange Fees and Special Operating Rules for Card-Based Payment Transactions came into force on December 17th.  

For the first time ever, the Law governs payment card operations in the Republic of Serbia in a comprehensive way.  Payment cards are the most popular cashless payment instrument in Serbia, the National bank of Serbia (NBS) says in its press release. In the first nine months of 2018, the share of card transactions in total consumer transactions carried out with selected payment instruments was 60.15%. 

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Thanks to new rules that bring higher transparency, shops may choose which payment cards they wish to accept at the point of sale, depending on the charges on each particular card, which is expected to increase competition and encourage the use of more affordable products.

Fees apply only to banks and shops

Now that the interchange fees have been reduced, the key question is whether shoppers are also going to feel the benefits of it given the fact that shops usually bore the cost of interchange fees by incorporating them into the price of a product.

Shop owners don’t see any room for price reduction. The representatives of large retail chains operating in the Serbian market point out that consumers pay for goods with cards, but also with cash, so it is impossible to make any concessions. As stated, these fees relate exclusively to the bank – shop relations, i.e. the use of the POS terminals, and they do not apply much to consumers. In their words, there is no reason for any price corrections.

Vera Vida from the Centre for Education and Consumer Protection also claims that it is not realistic to expect that the prices in shops will be reduced.

“From our past experience and working with shops and consumers, we see that the prices of, for instance, crude oil dropped, that never affected the overall prices in the country. Although, there might be a good enough reason to reduce the prices, there simply isn’t enough good will among retailers to do so,” Vida says.

NBS expects law to bring positive effects

“With the current average of 1%, the Law limits interchange fees to the EU level, that is, to 0.2% for debit card transactions and 0.3% for credit card transactions with a six-month transition period, from December 17th, 2018 until June 17th, 2019 when interchange fees will be limited to maximum 0.5% for debit and 0.6% for credit cards. With a view to achieving the goals set in the new law as soon as possible, as the DinaCard operator, the NBS stipulated the application of interchange fees of 0.2% and 0.3% for debit card and credit card transactions, respectively, starting as early as December 17th, 2018, i.e. without the transition period”, the National Bank of Serbia’s press release says.

(Blic, 17.12.2018)

https://www.blic.rs/biznis/moj-novcanik/trgovci-od-danas-placaju-manje-naknade-bankama-za-koriscenje-kartica-da-li-ce-se-to/1v275eq

 

This post is also available in: Italiano

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