Issuing settlement licenses to entities settling debit card transactions
- The Supervisor of Banks is publishing a draft supervisory framework for merchant-acquirers.
- The public is invited to submit comments to the draft document of principles by June 9, 2013.
In accordance with Amendment 18 of the Banking (Licensing) Law, the Bank of Israel is entrusted with issuing settlement licenses to entities wishing to operate in the settlement of debit card transactions (hereinafter: merchant-acquirers or acquirers). A supervisory framework for merchant-acquirers has therefore been set out, including:
- Obligations that apply to a merchant-acquirer, including prudential directives and risk management provisions;
- Financial reports (to the public and to the Banking Supervision Department);
- IT requirements (including information security);
- A specification for examining requests to obtain a settlement license (charter);
- Criteria and terms for a controlling owner and for those holding the means of control of an entity requesting a settlement license;
- A questionnaire for the controlling owner of the entity requesting a settlement license.
The definition of the supervisory framework and the process of granting a settlement license should expand the number of acquirers in the economy, thereby encouraging competition in the settlement field, while maintaining the stability of active acquirers, which will ensure that payments from the issuing companies are received by the merchant businesses. The framework is also intended to maintain the acquirers' fairness toward the merchant businesses.
The public is invited to submit its comments to this draft no later than June 9, 2013.