Another step in the implementation of the reform enhancing the competition in banking

Another step in the implementation of the reform enhancing the competition in banking: Rules for hosting new acquirers on computer infrastructures of existing acquirers

 

The Governor of the Bank of Israel today published rules regarding the hosting of new acquirers on existing acquirers’ platforms. The rules will enable new acquirers, that are not directly connected to the payment system, to carry out the transactions via existing acquirers, so that the new entities will be able to enter the market easily and rapidly. This publication is another step in a series of measures by the Bank of Israel and the Ministry of Finance to promote the implementation of the reform to enhance competition.

 

Supervisor of Banks Dr. Hedva Ber said, “The Bank of Israel sees great importance in the entry of new acquirers into the payment market in Israel, as it enhances the competition in the market and reduces acquiring costs for the merchant, and particularly for small and medium sized businesses. The ability of a new acquirer to be hosted by an existing acquirer will make the rapid entry of a new acquirer into the market possible. This step alongside others that we carried out in the past year, including the granting of two licenses to new acquirers, are already reflected in reduced acquiring costs and improved service to businesses.”

 

The preparation of an infrastructure for acquiring by a new acquirer that has received an acquiring license can be complicated and take a long time. The Increasing Competition and Reducing Concentration Law enables a new acquirer, for an interim period until such infrastructure is set up or just in general, to carry out the acquiring through an existing acquirer, meaning to be hosted. The hosting will ease the entry of new entities into the acquiring market, in which three main companies currently are active, in addition to two companies that have already received a license but have not yet begun to operate. The Law also established that the Governor, with the consent of the Minister of Finance, shall establish the rules for regulating the status and activity of a hosted acquirer and the rules for hosting, including in a manner that will ensure that the hosted acquirer does not place the continued activity of the existing acquirer at significant risk, such as risk of money laundering. These rules are being published today.

 

The main goal of these rules is to make it easier for new acquirers to enter the market. These leniencies are an additional plank in the encouragement of competition in the payments area and are part of the implementation of the reform to encourage competition. Prior to this step, there were leniencies for the separated[1] companies[2], publication of the interchange fee[3], leniencies regarding the minimum capital required of an acquirer[4], and marked simplification of the process of receiving an acquirer’s license[5], which led to granting two new licenses to acquirers[6], which are in preparatory stages before beginning activities.