In Ukraine, they want to legally reduce the commission for acquiring. Banks are against this, they argue that if they lose in profitability, they will increase tariffs for customers and reduce the number of freebies. Monobank, according to co-founder Oleg Gorokhovsky, generally lives on this interest rate. The editorial board of MK.Today explains why online merchants demand lower commissions and how this may affect bank customers.
What happened
2 In April, three Ukrainian banks: PrivatBank, Oschadbank and Raiffeisen Bank Aval announced a reduction in the interbank commission until 2023. With this statement, they addressed the Parliament, the NBU, the Cabinet of Ministers and business. «The largest Ukrainian banks operating in the field of acquiring confirm their readiness to make every effort to reduce the size of the interchain commission in Ukraine,» the PrivatBank website says.
From July 1, 2021, they will reduce the commission to 1.2%, from July 1, 2022 to 1%, and from July 1, 2023 to 0.9%. Now this percentage is 1.6-3%.
At the same time, banks are asked not to reduce the commission for acquiring according to the law.
What is acquisition and how does it work
Acquiring is an opportunity for retail outlets to accept bank cards to pay for goods and services. When paying with a bank card in a store, the name of the bank appears on the terminal. This bank owns a payment terminal, and after you have paid for the goods, it transfers funds from your bank account to the store account.
Here is an example
The buyer pays with a PrivatBank card in the store where the Raiffeisen Bank Aval terminal is installed. At the same time, Raiffeisen Bank Aval transfers a commission for the interchain (1.4-1.8%) to PrivatBank. The rest of the interest rate (about 1%) remains with Raiffeisen Bank Aval, which it shares with Visa or Mastercard and Apple or Google Pay.
Why retailers want to reduce commission
Rozetka founder Vladislav Chechetkin says that the price of each product sold in Ukraine already includes 1.8-3% bank commission. Each card transaction costs Rozetka almost 2%, while the cash payment service is much cheaper.
«We spend less every year renting 90 Rozetka stores, all our warehouses and all our offices, than we do on banking fees,» he said.
What Visa says
Visa supported the initiative of banks to gradually reduce the size of the interbank commission. «Visa worldwide supports a market approach to determining the inter-chain rate and cost of purchased services in accordance with the requirements of economic competition laws and emphasizes the inadmissibility of its regulation by administrative procedure,» Visa said in a statement.
The company hopes that the government of Ukraine will support this initiative.
What customers can lose if the percentage is reduced
Retailers say they will cut the price of goods or services once the acquisition is reduced. But that’s just a one percent reduction. It is unlikely that the iPhone for 20 thousand hryvnia will fall in price by 200 hryvnia. And how to check it?
«The end user will not see the promised reduction in the cost of the product. Prices will remain at the same level,» says Elena Nezhedka, chairman of the Supervisory Board of Concord Bank.
Also, according to Elena, banks will cancel the issuance of free cards and the consumer will have to pay for them, as is now done in Europe.
Banks can also cancel cashback, reduce the grace period for credit cards.
«Banks will also give up other pleasant things, such as free entrance to the business lounge at airports, packing luggage, and so on,» Elena said.
PrivatBank, in its recent statement, wrote that it would increase the cost of servicing cards, and the interest rate on loans would increase by 3%. And most importantly, banks will turn off Apple Pay and Google Pay due to high fees and additional fees. Therefore, customers will no longer be able to pay for goods by phone.