If Isracard can't come to an agreement that lets the other credit card companies clear its cards, the Knesset Economic Affairs Committee will force it to do so through legislation, and Isracard won't be setting the terms, threatened committee chairman MK Carmel Shama-Hacohen yesterday.
The Knesset already passed the so-called Isracard law, which is scheduled to go into effect on May 15. That law, designed to increase competition in the credit card sector, mandates that a credit card company that has issued more than a certain percentage of the country's credit cards - namely, Isracard - allow other companies to clear its cards. The law does not set the terms between the companies.
The issue at play is the clearing charge. Each credit card company charges businesses a certain percentage of the transaction cost - generally between 1% and 2% - for clearing customers' credit card payments. Smaller businesses generally wind up paying higher fees.
Isracard has issued 17% of the country's credit cards, but doesn't let other companies clear them.
The other two players, Leumi Card and Cal, clear primarily Visa and Mastercard. Isracard clears all credit cards. Therefore, most businesses choose to work with Isracard, even though its fees are often higher.
Two hours before the committee meeting yesterday, Isracard announced it had come to an agreement with Leumi Card. However, it is not close to an agreement with Cal.
Present at yesterday's committee discussion were three MKs - Shama-Hacohen, Shai Hermesh and Yulia Shamalov Berkovich, and eight lobbyists - four representing Cal, two on behalf of Isracard, one representing Leumi Card and one representing Visa Europe.
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