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Changes in the organisation and implementation in the payment market

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  • Case number: 8/2015
  • Date: 16/6/2015
  • Company:
    • Arion banki
    • Valitor hf.
    • Landsbanki Íslands hf.
    • Íslandsbanki hf.
    • Borgun hf.
  • Sectors:
    • Financial services
  • Policy Area:

    No policy area found

  • Summary

    The Icelandic Competition Authority (“the ICA”) announced on 18. December 2014 that three banks, Arion Banki, Íslandsbanki and Landsbanki, as well as two payment cards companies, Borgun and Valitor, had each completed a separate settlement with the Icelandic Competition Authority. These settlements brought a closure to an extensive investigation into certain anti-competitive practices in the payment market. The enclosed decision includes the settlements as well as the reasoning underlying the settlement resolution.

    With the settlements each of the aforementioned undertakings admitted that certain implementation in the payment market was not in accordance with Articles 10 and 12 of the Competition Act and Article 53. of the EEA agreement. The undertakings also committed to implement comprehensive measures that are designed to reinforce competition. They also agreed to pay fines, totaling ISK 1,620 million.

    The settlements will lead to positive structural changes in the organization and implementation in the payment market. Their main goals are to stimulate increased efficiency in payment card services by creating basis for greater discipline from customers, to ensure equal competitive conditions in the field of acquiring services and in the field of card issuing services, reduce the risk of conflicts of interest in the operation of financial undertakings in the payment market, and generally to encourage more active competition in the fields of card issuing and acquiring services.

    The changes involve i.a. the introduction of caps (maximum limits) on interchange fees which are fees carried by vendors via the merchant fee charged to them by acquirers who in turn pay the interchange fees to the banks (as the card issuers). The changes will also lead to increased transparency in charges for payment card services and are intended to lead to increased efficiency in this field. In addition, Valitor and Borgun will ensure clear separation between issuing services and acquiring services, as the integrated operation of both services has given rise to restrictions on competition in the payment market. Competitors in the retail banking market, moreover, will cease to share ownership of payment card companies, as this arrangement has not proved conducive to competition. Moroever, it will be ensured that Valitor and Borgun provide services to entities other than their owners on a non-discriminatory basis.