22 June 2015
Reports in newspapers in Cyprus have identified the link between rising prices in the consumer market and the resumption of monopolistic practices by JCC Payment Systems. The stories have appeared in the Politis’ 17 June edition and in Simerini on 18 June.
JCC has been the sole company to deal with the acquiring and processing of payments card transaction in the Republic since FBME Card Services was forced to suspend operations in August last year. The company had to take this decision, and make three-quarters of its employees redundant, as a direct result of the Resolution measures imposed on the Cyprus branch of its parent, FBME Bank. Unable to obtain access to its bank accounts in FBME due to the effective closure of the branch ordered by the Central Bank of Cyprus, and then the very limited re-opening, FBME Card Services had no alternative.
This left JCC as the only organisation in the Republic able to acquire and clear payments. According to Politis, JCC’s fees have risen as a consequence. “A survey of merchants has shown these have gone up by as much as 0.25% – squeezing margins and contributing to rising consumer prices,” the newspaper reported, adding that card related charges in Cyprus are now the highest in Europe. In addition, JCC is believed to be using the threat of higher penalty fees to force merchants to sign up to lengthy contracts as a way of perpetuating its de facto monopoly.
JCC, which is owned by a consortium of banks, was set up in 1989 and enjoyed a monopoly until the arrival of FBME Card Services in 2009. Having competition in the market immediately began to push prices down. JCC is said to have responded with anti-competitive practices which was the subject of a complaint to the Republic’s Commission for the Protection of Competition. An investigation was launched and in April 2014 the Commission issued its preliminary decision and found that JCC had “restricted competition” and its behavior was “in breach of Articles 3 and 101 of the Treaty on the Functioning of the European Union”.
The case was resumed in February and March this year, and the Commission is expected to announce its final decision regarding JCC’s practices before the summer is out.
Apart from the impact on the prices consumers pay in the shops when using electronic payments systems, both newspapers drew the link between this case and the Resolution measures imposed by the Central Bank of Cyprus on the FBME branch.
Links are provided to the Greek language story in Simerini click here, to the Engish language story in Cyprus Weekly click here.