Standard charges for retailers in electronic cash card payment system abandoned

The leading banking associations in Germany are to abandon their agreement on standard charges payable by retailers for use of the electronic cash card payment system. The associations have undertaken a commitment to the Bundeskartellamt to this effect. The competition authority criticizes the present agreement as anticompetitive (see also the press release of the Bundeskartellamt of 28 May 2013).

Up to now retailers in Germany have paid a standard charge to the bank issuing the Girocard (formerly ec card) for each Girocard transaction. This charge is jointly set by the banking associations and amounts to 0.3% of the respective sales value, at least 0.08 euros. A lower rate applies to sales transactions at petrol stations.

In the Bundeskartellamt’s view the standard charge constitutes a restraint of competition. It has become clear from an in-depth examination of the market situation that instead individual negotiations between the market participants, i.e. the retailers and card issuing banks, are possible and that there is no justification for continuing with this restraint. In future the level of the charge will be negotiated between the card issuing banks and retailers.

Andreas Mundt, President of the Bundeskartellamt: “A standard charge set by the banks restricts competition. There is also no justification for this. Large sales chains or oil companies with their petrol stations have long abandoned this arrangement and have negotiated discounts with the banks for transactions at their cash tills. These kind of negotiations are now also possible for small retailers and their respective network operators. The change of system will now create the necessary conditions for competition on prices.”

Electronic cash is a system used for non-cash payments at retail outlets by means of the Girocard. It is by far the leading card payment system on the German market, with an annual transaction volume of 128 billion euros. The major rival product to the Girocard and alternative for retailers is the electronic direct debit system (ELV), where the Girocard is used to create a direct debit.