Banks will be forced to remove Ukrainians from services like Apple Pay and Google Pay if parliament passes a law to reduce transaction fees that businesses pay to banks, Razvan Munteanu, deputy chairman of the board of PrivatBank, said at a briefing on March 29.
If the government passes this law, the fee to use cashless payments will be lowered from around 2-3% to 1% of the payment amount. Its component, the interbank exchange fee, will be lowered from 1.4-1.8% to 0.5%.
Banks say this would make the use of digital wallet services like Apple Pay unprofitable for them. Large retailers support the bill.
PrivatBank forecasts that the state budget may lose Hr 4 billion per year, if the bill is adopted.
The bank expects that its profit may decrease by Hr 5.3 billion per year, depriving the state of Hr 3.3 billion in dividends. Also, according to PrivatBank, cashless transactions may decline from 55.2% to 25.6%, which would bring down tax revenues by Hr 1 billion per year.
According to Munteanu, the cost of loan servicing would increase by around 3-3.5% per month. The bank would also raise the cost of servicing payment cards to over Hr 200 on average.
He added that small businesses won’t be able to use cashless payments through point of sale (POS) terminals, since individual entrepreneurs with cash flows of less than Hr 33,000 per month will be loss-making for banks.
Finally, the payment market would lose hundreds of millions of hryvnias that banks would otherwise invest in its development, he said.
“We don’t accept the position of the lobby of large retailers, and offer open and transparent market information on the volume and average size of acquiring and interchanging fees, cash and non-cash payments, investment in development and support of payment infrastructure, innovation and loyalty programs for consumers,” Munteanu said.
On Feb. 19, the government adopted a bill on payment services in the first reading. It has provoked backlash from banks but praise from retailers.
Vladyslav Chechotkin, the chief executive at Ukraine’s largest online shop Rozetka, supports the law because the acquiring fee in Europe is lower than in Ukraine, therefore European goods cost less.
“To make it easier for you to imagine these 2% for payment by cards – I will say that for renting 90 Rozetka stores, all warehouses and all our offices, we annually spend less than the bank commission (acquiring fee),” Chechotkin wrote on Facebook.
