Electronic cash – Leading banking associations implement commitments

In the past retailers in Germany have had to pay a fee of 0.3% of the value of each electronic cash card payment transaction to the bank issuing the card. The level of the fee was jointly set by the leading associations of the German banking sector. The Bundeskartellamt initiated a proceeding against this practice. In April last year the banking associations undertook to abandon the standard charges for retailers and to introduce a system of negotiated fees (see also press release of 8 April 2014).

Andreas Mundt, President of the Bundeskartellamt: "The leading banking associations have fulfilled their commitments. Retailers have now been able to agree on in some cases considerably reduced prices by way of negotiation. Smaller retailers in particular now benefit from the new system. In contrast to large retail chains or oil companies with their petrol stations, small retailers were unable to negotiate any price concessions in the past."

Since 1 November 2014 electronic cash transactions in Germany are only processed on the basis of negotiated fees between retailers and banks.

The negotiations were usually led by the respective leading banking associations with different so-called concentrators, which each represent a group of retailers. In most cases network operators of the electronic card systems have functioned as concentrators. However, in future third parties such as retailer cooperations will also be able to conduct such negotiations.

After cash payments electronic cash is by far the most used means of payment in Germany. In 2013, over 2.5 billion transactions with a sales volume of 140 billion euros were processed via electronic cash. Income earned from retailer fees amounted to over 300 million euros. For retailers, an important alternative to the electronic cash system is the electronic direct debit system (ELV).

Planned European Regulation

The planned EU Regulation on Interchange Fees for Card-based Payment Transactions provides for a limitation of interchange fees in debit card systems to 0.2% of the value of the card transaction. To the extent that the regulation will also be applicable to the electronic cash system, it will generally not affect the existing obligation in Germany to use exclusively negotiated fees.

Andreas Mundt: "It is now important that this leeway created by competition is not restricted again by an over-stringent regulation of the card payment systems. It would be appreciated if the government would make use of the possibilities to apply the European requirements to the German market in a flexible manner."

Further information on this topic can be found in a case summary (in German) which has been published today.