Sunday, February 26, 2006

Are the bank-individual contracts on debit-cards a good thing for the small retailer..?

Since 2004 the Dutch retailers need to negotiate price for POS-authorisations with their banks directly rather than via Interpay. An investigation into the result of all that for prices can be found in the Financial Monitor 2005 of our competition authority. The research shows that small retailers get a worse deal than big retailers.

So, the effect of all this effort of retailers protests against the monopoly price setting by Interpay is that bigger retailers end up with better deals than smaller ones. While in theory this may be more efficient on a macro-economic level, the result is that, if applied to other purchase processes as well, in the end small retailers will have a higher cost base.

Perhaps someday scientists will come to conclude that the 'monopolistic' provision of services by Interpay wasn't soo bad after all, as it worked as a coordination mechanisms that ensured accessibility/payability for the small retailer, effectively funded by the big ones.