Azerbaijan, Baku, July 8 / corr Trend I.Khalilova /
Azerbaijani banks began discussing Visa and Mastercard international payment systems, possibility applying coordinated tariffs on inter-state operations with these cards, Jalal Orujov, Milli Kart Processing Center Executive Director told Trend.
"It will enable the banks to serve payment cards at a minimal rate, unlike now when card payments are based on Visa and Mastercard international tariffs," Orujov added.
Tariffs are divided into two parts. With money, which international payment systems charge for technical processing services, a fixed rate has been set based on bank turnovers. On average one transaction costs 3-4 cents in the region. Taking into account the total payment for the clearing services, the total cost does not exceed 10 cents (about 6-7 cents).
Besides tariffs transferred to payment systems, there are tariffs which the bank pays to the opposite side. If a bank customer withdraws cash, the card issuing bank must pay a commission to the bank procurer. These rates constitute the main burden on international rates, as well as for issuing cash. Depending on the product the issuer pays 0.8-1.2 percent of the transaction.
The issuer pays this amount to the procurer directly based on the ATM services or his client. A similar scheme is used for purchases of goods through the POS-terminals. Tariffs are divided into two parts: in most cases, a fixed fee is provided by the international payment systems. There are also fees for inter-bank payments. In the latter case, the stream of payments is not directed away from the issuer to the acquirer, but in the opposite direction - from the acquirer to the issuer. Rates for basic payments fluctuate between 1-1.6 percent.
These rates are the same in the CEMEA (Asia, Central and Eastern Europe) region. However, there are specific types of credit cards with much higher fees for the given services - up to three percent of the transaction.
In the case of integrating processing centers, fees for Visa and Mastercard today comprising 6-7 percent, will be automatically eliminated or reduced.
Accordingly, the final price for cardholders to such services or the stores also declined. For cardholders, the cost of services by the issuer to the acquirer is one percent for a cash withdrawal. Typically, the cost of such a transaction rests at 1.5 percent.
A cash withdrawal from an ATM has a fee of about 1.5-2 percent, which account for one percent required for the issuer to pay to the recipient. If the issuing bank and recipient would agree to reduce the rate to 0.5 percent, respectively, the final cost to the cardholders should fall from 1.5-2 percent to 1-1.5 percent.
In the case of stores, an agreement was reached that interest payments would be made for transaction turnover. Typically, the percentage begins at 2.5 percent or higher, because 1-1.6 percent is paid to the issuing bank. Banks may again negotiate a reduction in tariffs, but then shops have to install POS-terminals for less than the amount to which the banks agreed. The best option is to reduce tariffs more than twice. Of course, this is profitable for shops which will have to pay less, VAT experts believe.
According to Orujov, the companies Visa and Mastercard have applied an inter-state settlement plan to develop cashless settlements and card business in Azerbaijan by using Visa and Mastercard card payments using manat (AZ NNSS).
"Application of AZ NNSS enables the reduction of operation expenses while serving cards," he added.
Payment cards in circulation rose by 6 percent as of May 1, compared to a similar period last year, reaching 4.353 million. About 3.654 million transactions were made with cards through POS-terminals and vending machines.