Forcing e-payment service providers to provide services at low fees can have many consequences, whether intentional or unintentional, the Chairman of the private sector ATIB (Assaray Trade and Investment Bank) and Tadawul Financial Services Company, Naaman Elbouri said.
Elbouri was responding to the Central Bank of Libya’s (CBL) decision last Sunday (9 March), following a meeting with bank managers headed by the CBL Governor Naji Issa, to reduce commissions imposed on bank card uses at points of sale (POS) to less than 1 percent as a maximum for all sectors without exception.
Commission for bank cards used at points of sale (POS) reduced in 2024
It will be recalled, and as reported by Libya Herald at the time, that in November 2024 the CBL, under Governor Issa, had initially reduced commissions imposed on the use of bank cards at points of sale (POS) to 1 and 1.5 percent, depending on product – from 3.75 percent.
The CBL had said its decisions comes within its efforts to enhance financial inclusion by expanding electronic payment services. This comes as part of its digital transformation plan that aims to reduce dependence on paper cash and facilitate financial transactions for citizens.
For their part, bank managers at Sunday’s meeting had reviewed the measures taken to improve the banking infrastructure, stressing their commitment to implementing plans that will enhance the efficiency of banking services and expand the scope of digital services, including increasing electronic points of sale and further expanding the issuance of bank cards.
At the end of the meeting, the Governor had stressed the continuation of periodic follow-up of the performance of banks, stressing the importance of joint cooperation between banks and the competent authorities to ensure the provision of banking services that meet the needs of citizens and enhance financial stability in the country.
Responding to the meeting’s outcomes, Elbouri said ”forcing” e-payment service providers to provide services at low fees can have four main consequences on providers.
1. Loss of revenue and sustainability issues
Payment service providers rely on transaction fees and other fees to cover costs such as infrastructure, enhanced cybersecurity, compliance with international standards (PCI) and customer support.
If they are forced to provide near-free services, they may not be able to continue operations or invest in improvements.
2. Low quality of service
Lower revenue is likely to reduce service quality, customer support, and system reliability.
Security measures may weaken, increasing the risk of fraud and cyberattacks.
3. Alternative Revenue Models
Service providers may offer hidden fees and mandatory subscriptions to compensate for lost revenue.
4. Competitiveness
Smaller providers may go out of business, leaving only large players who can afford losses or find alternative ways to profit.
Reduced competition may lead to monopoly and worsen conditions for long-term users.
Countries that charge low fees for payment service providers may have difficulty attracting or retaining FinTechs.
Tadawul and Moamalat services to be used interchangeably by customers
It will also be recalled that in November last year the CBL had finally allowed the private sector Tadawul Tech, one of Libya’s largest electronic payment providers, to interface its e-payment acceptance network with the state National Switch, Moamalat Financial Services Company.
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