The Bank of Israel has decided to bring law and order into the unrestricted territory of credit card fees with a new regulatory regime that promises to reduce charged to both businesses and cardholders, Globes reported on Wednesday.
Until now, supervision of credit card fees collected from businesses has been minimal; each company essentially set its own fees.
Following up on a promise made to three months ago to the Knesset Economic Affairs Committee, Supervisor of Banks David Zaken issued a list of fees credit card companies may charge; anything not on the list will henceforth be voided. Among those on the way out: fees for registering a business or changing an account to credit.
Regarding cardholders, Zaken cancelled the fee for payments made in installments. The Bank of Israel considers this fee unjustified, because the business receives full payment and there is no need to charge anything beyond what the credit card companies collect from the business for the transaction.
The fee is around NIS 0.50, and is collected from cardholders for every interest-free payment in installments. But it adds up: companies’ income from this fee is some NIS 60 million a year.
Zaken has also set uniform rates for all cards and all currencies, and cancelled a minimum fee of $3-6 for a cash withdrawal oversees, in addition to a percentage of the withdrawal.
The credit card companies object that while this measure will benefit businesses, it may also lead to transactions in installments to be cancelled in favor of credit transactions that will cost customers more.