The Treasury is expected to issue a call for tenders in 2019 for the selection of licensed organisations which can offer clearing services for card transactions.
The selection is to be managed by the Central Bank of Cyprus.
Currently such services are provided by JCC, and Bank of Cyprus which represents and issues American Express cards for clients based in Cyprus.
With Amex announcing the cancelation of cooperation agreements with European Banks, essentially leaving the EU, JCC will be the sole clearing agency active in the Cyprus market.
In a letter sent to the House answering MPs questions, Accountant General Rea Georgiou, said that the tender will be issued because a number of organizations that provide clearing services in Cyprus have been licensed by the Central Bank.
Essentially the tender will select the agency that will receive the lowest commission per transaction, which will help reduce the amounts paid by the state as credit card receipts.
She noted that that commission fees paid by the Republic to the licensed organizations range from € 20 to € 50 per transaction. In particular, the applicable fees paid to the organizations with which it cooperates are:
– Debit Cards 0.4%, with a maximum commission per transaction of €20.
– Credit Cards 0.5%, with a maximum commission per transaction of €25.
– Commercial and international cards 1.15%, with a maximum commission per transaction of €50.
With Amex out of the equation, JCC will be the sole provider of clearing services for card transactions as of end of March 2019. As noted by the Accountant General, the initial agreement of the Treasury with JCC Payment Systems Ltd was concluded in 2010, as there was no other licensed entity from the Central Bank for the clearing of card transactions.
Georgiou said that in December 2015 the agreement was modified with lower fees.
It was based on the provisions of the European Regulation, which had set a ceiling on interbank commissions for card payment transactions.
In addition, a similar agreement was signed with Bank of Cyprus, which is the authorized representative of American Express in Cyprus. According to Georgiou, they were the only organisations licensed by the Central Bank for the clearing of card transactions.
Georgiou responded to the members of the Parliamentary Finance Committee as part of the examination of the supplementary budget for 2018.
The supplementary budget includes additional funds of EUR 1 mln due to an unforeseen increase in electronic payments to the Tax Department.
Total charges to the government from card clearing agencies this year are expected to reach EUR 4 mln, twice the amount included in the initial budgetary plan.
The government has asked for a supplementary budget of EUR 1 mln, while another million is expected to come out of funds already allocated to the Ministry of Finance.
