Antitrust Authority, Israel’s credit card market watchdog, has warned Automated Banking Services (ABS) to make room for new competitors.
ABS is a privately owned company founded by five major Israeli banks: Bank Leumi, Bank Hapoalim, Israel Discount Bank, United Mizrahi Bank and First International Bank of Israel (FIBI). ABS has until October 2015 to allow competitors use its payment processing services.
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By GlobalDataDavid Gilo, director of Antitrust Authority, said that difficulty in using ABS’ payment processing systems has barred competitors from the field. He said: “This area is characterized by extremely restricted competition, and a number of attempts by players to enter the field…in the past have failed completely.”
The watchdog also said that interchange fees, charges paid between banks for clearing card transactions, had declined while processing fees paid to ABS have increased.
Credit companies that currently use ABS’s system include Isracard, owned by Bank Hapoalim, Leumi Card, owned by Bank Leumi and Israel Credit Cards Cal (or Visa Cal) owned by Discount Bank and FIBI. The watchdog said that the three companies make nearly ILS1.2bn ($2.7m) a year for the banks.
The directive could overhaul the local banking system and slash the billions amassed by the five banks every year from processing fees charged to cardholders and businesses.
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