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14 December 2020, 14:43
Reduce the commission for credit cards payments
We have a draft law No. 4178 and alternative No. 4178-1
#AtTheCommitteeConsideration, which propose to reduce the commission
when paying with credit cards.
Acquisition, as defined by the draft law No. 4178 — is a commission paid for the transactions services, carried out using electronic means of payment in the payment system. And the acquiring bank is an intermediary that helps the business owner to accept payments when paying for goods or services with a credit card.
The authors of both draft laws draw attention to the fact that the interest rates for payments by credit cards in Ukraine are much higher than in the European Union. For example, for large enterprises the commission is from 1.7% of each transaction, for small and medium business —from 2% to 3%. For some types of entrepreneurs, such size of the commission has significant impact on profit or even decreases it, — the authors of both drafts note.
In the EU, on the other hand, the rates of the commission are limited at the legislative level and are no more than 0.2% on debit cards and 0.3% on credit cards on each transaction. The relevant restrictions are set by Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions and are mandatory for all the EU member states.
In Ukraine, the commission for acquiring services is 7 times higher than the established rate for such remuneration in the European Union. This leads to the development of the shadow economy. The lion's share of the commission fee for the services of acquiring banks is the interchange fee (60% - 75%) — interbank exchange fee, which is paid for each direct or indirect non-cash transaction made with a credit card, and varies between 1.4 – 1.8% of the transaction amount.
What does the draft law No. 4178 offer?
The draft law establishes that the total amount of commission for a transaction may not exceed:
from January 1, 2021 to June 30, 2021 — 1.5% of the transaction amount;
from July 1, 2021 to December 31, 2021 — 1% of the transaction amount;
from January 1, 2022 — 0.5% of the transaction amount.
The size of the interchanging cannot exceed:
from January 1, 2021 — 1% of the transaction amount;
from July 1, 2021 — 0.65% of the transaction amount;
from January 1, 2022 — 0.3% of the transaction amount.
Information on the amount of interchanging and the amount of commission for acquiring services, as provided by the draft law No. 4178, should be posted by the bank on its own website. For violation of the requirements for the maximum amount of commissions, the National Bank of Ukraine shall apply to the acquirer a fine of ten times the minimum wage for each fact of such violation. Banks will also be financially liable for violating the requirements for disclosing information on the amount of fees. They will be fined five times the minimum wage.
What rates does the draft law No. 4178-1 offer?
It provides for setting a legal limit on the amount of interchange commission at 1.2% in 2021, 1.0% in 2022 and 0.9% in 2023 and the fee for acquiring services at 1.8% in 2021, 1.6% in 2022 and 1.4% in 2023, as well as to introduce financial liability for exceeding the established limits in the form of a fine of one hundred to two hundred non-taxable minimum incomes for each fact of such violation.
The Committee at its meeting on December 16 concluded that the provisions of the draft laws comply with the EU law and Ukraine's international obligations under the Association Agreement.
Acquisition, as defined by the draft law No. 4178 — is a commission paid for the transactions services, carried out using electronic means of payment in the payment system. And the acquiring bank is an intermediary that helps the business owner to accept payments when paying for goods or services with a credit card.
The authors of both draft laws draw attention to the fact that the interest rates for payments by credit cards in Ukraine are much higher than in the European Union. For example, for large enterprises the commission is from 1.7% of each transaction, for small and medium business —from 2% to 3%. For some types of entrepreneurs, such size of the commission has significant impact on profit or even decreases it, — the authors of both drafts note.
In the EU, on the other hand, the rates of the commission are limited at the legislative level and are no more than 0.2% on debit cards and 0.3% on credit cards on each transaction. The relevant restrictions are set by Regulation (EU) 2015/751 of the European Parliament and of the Council of 29 April 2015 on interchange fees for card-based payment transactions and are mandatory for all the EU member states.
In Ukraine, the commission for acquiring services is 7 times higher than the established rate for such remuneration in the European Union. This leads to the development of the shadow economy. The lion's share of the commission fee for the services of acquiring banks is the interchange fee (60% - 75%) — interbank exchange fee, which is paid for each direct or indirect non-cash transaction made with a credit card, and varies between 1.4 – 1.8% of the transaction amount.
What does the draft law No. 4178 offer?
The draft law establishes that the total amount of commission for a transaction may not exceed:
from January 1, 2021 to June 30, 2021 — 1.5% of the transaction amount;
from July 1, 2021 to December 31, 2021 — 1% of the transaction amount;
from January 1, 2022 — 0.5% of the transaction amount.
The size of the interchanging cannot exceed:
from January 1, 2021 — 1% of the transaction amount;
from July 1, 2021 — 0.65% of the transaction amount;
from January 1, 2022 — 0.3% of the transaction amount.
Information on the amount of interchanging and the amount of commission for acquiring services, as provided by the draft law No. 4178, should be posted by the bank on its own website. For violation of the requirements for the maximum amount of commissions, the National Bank of Ukraine shall apply to the acquirer a fine of ten times the minimum wage for each fact of such violation. Banks will also be financially liable for violating the requirements for disclosing information on the amount of fees. They will be fined five times the minimum wage.
What rates does the draft law No. 4178-1 offer?
It provides for setting a legal limit on the amount of interchange commission at 1.2% in 2021, 1.0% in 2022 and 0.9% in 2023 and the fee for acquiring services at 1.8% in 2021, 1.6% in 2022 and 1.4% in 2023, as well as to introduce financial liability for exceeding the established limits in the form of a fine of one hundred to two hundred non-taxable minimum incomes for each fact of such violation.
The Committee at its meeting on December 16 concluded that the provisions of the draft laws comply with the EU law and Ukraine's international obligations under the Association Agreement.