Taxing the plastic

The Office for Competition and Consumer Protection (UOKiK) has imposed a total fine of zł.164 million on 20 banks for colluding in a fee-fixing scandal. UOKiK stated that the group of banks, including the biggest players, have been fixing "interchange fees" for over 13 years, overcharging retailers for transactions made with Visa and Mastercard.

An interchange fee is an indirect charge paid by a retailer for any non-cash transaction; the money goes to the bank and the credit-card network. The charge, which is ostensibly used to cover maintenance of the card-payment system, can generate over zł.400 million annually for a bank. Interchange fees in Poland range from 1.4-1.7 percent per transaction, which is relatively high in comparison with countries such as Belgium (1.2 percent), Great Britain (1 percent) or Denmark (none).

In UOKiK's view, the charge is a hidden tax imposed on retailers which could result in increased prices; the institution's president has issued an immediate ban on the practice.

The fine is the result of an investigation launched in 2001 at the request of the Polish Organization of Commerce and Distribution (POHiD). The issue of interchange fees in Europe has also been scrutinized by the European Commission, which is pressing for a gradual reduction, requires any such fees to be based on the real costs of system maintenance, and requires that clients be informed about them.

"The decision will negatively affect consumers the most," claims the Polish Bank Association's Remigiusz Kaszubski in a formal statement. "UOKiK has shown a complete lack of understanding of the mechanisms governing this form of payment. From now on, every retailer may have to negotiate interchange fees with over 30 separate banks."

The general manager of Visa Europe in Poland, Małgorzata O'Shaughnessy, also criticizes UOKiK. "We are disappointed with the decision," she said in an official press release. "In defining the fees we do comply with the European Commission requirements, and base the interchange fee on cost analysis."

The banks in question are withholding comment until they receive formal letters from UOKiK.