EFSA Contributes to the SA Reserve Bank (SARB) Review on Interchange Determination Charges

As previously reported in the Newsletter, SARB started a process of investigating ‘interchange determination charges’ last year. These charges are made when a payment is made from one financial body (most usually an acquiring bank) to another financial body. The main reason for the charge is to protect against the risk that the payment will not go through. As an example, if you run an e-shop and bank at ABSA any payments made to you from any of the other banks, etc, carries an interchange charge. This charge affects any retail company, on- or offline. SARB issued a draft survey and invited all stakeholders to one-on-one interviews (by conference call). The EFSA delegation, lead by Thomas van der Spuy of CallPay who chairs the EFSA Online Payment Committee, had a call on 12 March with SARB. We welcomed the process – this was the first time stakeholders had been invited by SARB to comment on important policy issues (normally SARB simply discusses such issues with the acquiring banks). However, we pointed out that it was impossible to answer SARB’s central question (was the charge too high?), because the actual rate had not been disclosed. EFSA suggested that if the charge was still considered by SARB to be necessary (is there really any risk in a payment from bank A to bank B any longer?) that it should not be a flat percent, but should depend on the size of the purchase price. The next step will be a follow-up written survey which we expect to receive from SARB in April.