Mastercard market opened to competition

The Antitrust Authority and Isracard have reached an agreement on opening Mastercard to competition, while restricting Isracard's power at the clearing stage.

Antitrust Commissioner Dror Strum recently petitioned the antitrust tribunal to recognize the injunction he, Bank Hapoalim and Isracard agreed upon, regarding article 50-B in the Antitrust law.

The injunction lays down rules to open the Mastercard market to competition, and to restrain the powers of Isracard, which is the dominant force in the Mastercard sphere.

Visa ICC and Leumi Card recently received licenses from Europay to clear for Mastercard too.

Under the agreement, Isracard is reducing its fees from businesses by a total of 12%.

The background behind the agreement is the historic segmentation of the market. Banks Leumi and Discount had controlled the Visa market through their joint company Visa ICC. Bank Hapoalim, through its Isracard subsidiary, had the deathgrip on issuing and clearing Mastercard and Isracard.

While the Visa market changed, and now two banks offer and clear the cards ICC and Leumi Card, Isracard remained the sole power in its sphere and the only one that can today offer Mastercard clearing services to businesses.

Theoretically the Antitrust Authority could declare it a monopoly, but given the company's acquiescence to restrictions, Strum will leave its official status unchanged.

Among other things, the agreed-upon injunction forbids Isracard from linking clearing for Mastercard with clearing for Isracard.

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