The Ministry of Finance intends to submit to the new Knesset's opening session a bill to open the credit card and cross-clearing market to full competition. The bill is based on the conclusions of the Zelekha committee, submitted in February 2007.
In March 2008, Minister of Finance Ronnie Bar-On announced that he would adopt the credit card reform. "We must review and promote structural change that will improve the level of competition in the retail credit card market," he said.
However, formulation of the bill was delayed and then stopped altogether when the economic crisis erupted late last year. Accountant General Shuki Oren is now pushing the measure, which is designed to encourage the entry of new credit clearing companies into the market.
The main clause in the bill calls for the transition to full cross-clearing by all credit card companies and brands. Zelekha's recommendations were partly realized in a deal between Israel's main credit card companies - Isracard Ltd., Leumi Card Ltd., and Israel Credit Cards-Cal Ltd. (ICC-Cal) (Visa) - and the Antitrust Authority in October 2006.
However, the agreement did not cover clearing for all credit cards, such as American Express (marketed by Isracard), which has a 4% share of the market, Diners Club (marketed by ICC-Cal), which has a 6% market share, or Isracard, which has 17%. The agreement gave Isracard a significant competitive advantage because businesses that wanted to work with just one clearing company had only Isracard, which offered full services, to work with.
Published by Globes [online], Israel business news - www.globes-online.com - on January 25, 2009
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