Namibia: Bankers Apply to Fix Interchange Charges

The Payment Association of Namibia and commercial banks have agreed to charge clients similar fees for withdrawals made from different banks.

These fees are called interchange charges - when banks interact to either accept or send each other payments on behalf of customers and are mostly charged when a client of one bank swipes at certain retailer which banks with a different bank or when a client withdraws at a foreign ATM, which does not belong to his/her banking institution.

To ensure they charge similar fees, the banks applied for approval from the Namibian Competition Commission(NaCC) to charge a similar fee.

In a statement issued this week, Ashley Tjipitua-Hei the NaCC director for enforcement, revealed that the banks had applied to the commission to be allowed to charge the same fee without being accused of colluding.

The commission indicated that the bankers and the payment administrator are seeking to be exempted from certain provisions of the Competition Act, so that they determine interchange fees to be levied in the event that a customer of one bank makes a payment to a customer of another bank.

"The commission herewith confirms that the Payments Association of Namibia (PAN) has, in terms of section 27(1) of the Competition Act, 2003 (Act No.2 of 2003) applied that PAN as well as Bank Atlantico, Bank BiC, Bank of Namibia, Bank Windhoek, First National Bank Namibia, Letshego Bank Namibia, NamPost, Nedbank Namibia, Standard Bank Namibia and TrustCo Bank Namibia be exempted from certain provisions of Part 1 of Chapter 3 of the Competition Act," Tjipitua-Hei confirmed.

The exemptions that the banks are seeking would be for a period of three years.

This means, for a period of three years, should the commission give the green light, there would not be competition in determining

interchange fees charged but it will be determined by the payment administrator and the bankers.

"PAN and the participating banks are party to a multilateral agreement in terms of which they have agreed on the interchange fees that will be levied in the event that a customer of one bank makes a payment to a customer of another bank," she said.

However, in terms of the Competition Act, agreements between undertakings, decisions by associations of undertakings or concerted practices by undertakings which have as their object or effect the prevention or substantial lessening of competition in trade in any goods or services in Namibia, or a part of Namibia, are prohibited, unless they are exempt in accordance with the provisions of part of three of the act.

Tjipitua-Hei explained that if the bankers get their exemption, part one of the act that prohibits anti-competitive behaviour and activities will not apply to them.

"Undertakings and associations of undertakings that have been exempted from the Competition Act will thus not be held liable for contraventions of the Competition Act in respect of the exempted conduct," she stated.

In addition, the Commission will now assess whether or not there are exceptional and compelling public policy justifications that would warrant the collective determination of interchange fees to be exempted from the prohibitions contained in the Competition Act.

To grant or refuse the exemption, the Commission is required to take into account the extent to which the interchange fees will maintain or promote exports; enable small undertakings owned or controlled by historically disadvantaged persons to become competitive.

They will also assess if the planned price fixing will improve, or prevent decline in the production or distribution of goods or the provision of services.

The commission will also look if the benefit for the public which outweighs the lessening in competition that would result from agreements, decisions or concerted practices.

The Commission is currently seeking input from the public in respect of implications that may arise as a result of the collective determination of interchange fees by PAN and the participating banks.

The commission has not given a specific date to announce the outcome of the application, saying it depends on how fast the public comes through with inputs.

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