NMa gives its opinion on the Payment Services Covenant of 2005
The 'Over-the-Counter Payment Services Covenant of 2005 [Convenant Toonbankbetalingsverkeer 2005] between eight Dutch banks and undertakings which offer their customers the possibility of PIN payments is not contrary to the Competition Act. The Netherlands Competition Authority (NMa) announced this today in an informal opinion.
This Covenant brings to an end a long drawn-out conflict between the retail trade and banks about the cost of point-of-sale PIN transactions. In addition, the covenant is the basis on which the participating parties jointly make plans to ensure that payment services are socially more efficient, safer and cheaper.
The Covenant consists of three agreements:
- Each undertaking which wishes to offer PIN payments as a means of payment will be granted a discount of at least 1 eurocent per transaction on the individual PIN tariffs agreed in negotiations between the bank and the company (on average five cents per transaction) retrospectively from 1 January 2005. Undertakings which only offered the possibility of PIN payments after 1 January 2005 will also receive the minimum discount.
- In addition, a so-called "innovation fund" was set up to promote more efficient payments traffic. This fund comprises an amount of EUR 10 million financed by the banks.
- The parties have also expressed their intention to develop innovative plans jointly to make the payments behaviour of consumers and business account holders more efficient.
On the basis of information provided by the parties, NMa indicated in its informal opinion that the discount scheme proposed in the Covenant does not restrict competition. It is a discount of at least 1 eurocent. This means that each bank can grant a higher discount. The banks are at liberty to determine their own tariffs and higher discounts, as a result of which competition in relation to PIN tariffs will continue to exist. The proposed consultation about measures to make payments traffic more efficient is permitted provided this does not have the purpose or effect of restricting competition. NMa could not reach a conclusion on the proposed plan to promote more efficient payments behaviour since it is not yet known what measures will be taken.
Within the framework of its regulatory tasks, NMa will monitor market developments. NMa also pays attention structurally to the financial sector. For instance, NMa presents its views on competition in the financial sector by publishing the Financial Sector Monitor, which was set up in 2003 with the support of the Ministry of Finance. The financial sector was designated as a priority area of attention in NMa's Agendas for 2003, 2004 in 2005.
NMa issues an informal opinion to give market parties clarity on a certain issue relating to competition. An informal opinion is not a formal decision and is drawn up at the request of the parties and on the basis of the information provided by these parties. NMa only gives an opinion if this relates to a new legal issue of considerable social and/or economic importance. In addition, it must be possible for NMa to draw up an advisory letter on the basis of the information provided by the applicant, in other words without NMa having to do further research into the facts of the case.