Tuesday, January 16, 2007

Polish competition authority bans interchange fees

Interesting topic, those interchange fees. The Polish competition authority decided to fine some 20 polish banks for using it, at least for not demonstrating that it was cost-based. See also the happy news at this site (polish retailers):
The Office for Consumer and Competition Protection (UOKiK) has decided to accept the arguments of The Polish Organisation of Commerce and Distribution (POHiD), which, five years ago, accused a group of banks of an illegal agreement to keep interchange fees for paying with Visa and MasterCard cards at stores, at a specified, high level. The UOKiK has fined 20 banks an aggregate sum of PLN 164m (€42m).

Interestingly the decision appears to be based (amongst others) on the reasoning that in other countries (such as the Netherlands) there is no interchange fee for debit-cards. So why need in Poland?

To be clear: while there is no formal interchange fee for debit-cards in the Netherlands, Dutch banks continue to stress that there is a compensation mechanism (in the form of dividends of the processor) which is the equivalent. So the Dutch appearance of the interchange fee is not the traditional interchange fee but higher dividend to shareholders in the POS-switch. So to refer to the Dutch as not having an interchange fee and thus implying that there is no compensation mechanism, is in my view incorrect. And it would be quite interesting to know if this correction to this Polish mis-'understanding' of the Dutch situation (which one can also encounter at the European Commission) would also change their judgment?

Other than that, this appears to be a case where Poland wishes to demonstrate its good EU citizenship by repeating the generic claims /thinking on interchange fee and ruling something which is deemed to be most popular among regulators. Only to find out later that the Commission itself is not daring to take a similar stance as it realizes that the issue is much more complex than they thought at first...?

Update: see also this overview article at Euractiv.