Credit cards (pixabay photo)
ISA and Masab are the two main payment systems in Israel that were previously controlled by the banks. Through these payment systems, credit cards are cleared, funds are transferred between bank accounts and more. Over the years, there have been many collaborations between the companies, such as: joint CEO and management, joint offices and joint computer systems.
On May 10, 2020, the ISA and Masab submitted a request to approve the cooperation between them as a restrictive arrangement. The competition commissioner objected to the approval of the restrictive arrangement as it could harm competition and is not in the public interest. The Commissioner believed that the separation of cooperation between the companies could lead to the development of competition between payment systems and increase the innovation of the means of payment in Israel.
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On February 27, 2022, and after contacts with the Commissioner, an agreed request was submitted for approval of the separation outline to the Competition Court so that the restrictive arrangement would be approved under agreed conditions. The conditions, formulated in cooperation with the Payments Division at the Bank of Israel, include a complete separation of the companies from the level of management, application development and immediate payment services to the infrastructure on which the companies rely.
In accordance with the agreement with the competition commissioner, most of the managerial functions in the companies have already been separated, as well as a significant part of the engagements with third parties. Under the conditions, all the companies ‘manpower and offices will be separated by August 2022, most of the applicative developments that allow intensification of competition between the companies will be separated by the end of 2023, the companies’ infrastructure will be separated by the end of 2024. The competition tribunal the outline agreed in full.
Michal Cohen, Supervisor of Competition: “The dissolution of the monopoly of payment systems in Israel is a significant step that will enable the development of competition between two entities that have hitherto been conducted as a single entity and promote the removal of material barriers to the development of an advanced and diverse payment market in Israel.”
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