Regulation of interchange fee to increase cash turnover in Ukraine
The draft law № 4364 over the interchange fee regulation will lead to an increase in cash turnover in Ukraine and increase the cost of banking services for customers, the Head of the Card and X-sales Business Development Department of OTP Bank Yevhen Hruby believes.
According to E. Hruby, the EU practice shows that the regulatory regulation of interchange rates leads to an increase in the cost of servicing bank accounts for clientele and, accordingly, to a decrease in their number. After all, no bank may conduct unprofitable activities and has to implement additional fees to form product profitability.
Also, in his opinion, acquiring banks will begin to stop the card acceptance network growth. Besides, issuing banks will have to significantly narrow or even close loyalty programs (cashback, grace periods on credit cards). "This, in turn, can lead to a decrease in card turnover and the lack of additional motivation for the customer to make payments using payment cards. And the result will be an increase in cash turnover respectively, "- the banker said. On the other hand, according to him, as EU practice shows, measures to force interchange rates reduction in no way affect the goods price. "The interchange rate, which will potentially decrease by even 1%, in the goods' prices of UAH 400 (equal to the average check paid by a card in 2020 according to NBU statistics) will equal UAH 4 and will not be identified as a discount for a buyer. But the consequences of reduced income from all these operations, banks will feel very quickly - said E. Hruby.
An alternative way instead of fees regulation, according to the banker, should be its' evolutionary and harmonious reduction by banks and payment systems.
The draft law № 4364 over the interchange fee regulation is being prepared now for the second reviewing in Verkhovna Rada.
Share these news with friends!
Public Joint Stock Company OTP Bank is a subsidiary of OTP Bank, which is the largest independent Central-Eastern-European banking group. JSC OTP Bank is one of the largest domestic banks, a recognized leader in the financial sector of Ukraine. The Bank provides a full range of financial services to corporate and private customers, as well as to small and medium enterprises. The bank entered the Ukrainian market in 1998, and since then it enjoys a staunch reputation of socially responsible, reliable and stable institution providing its consumers with services of European quality standard.
Additional information
