(photo credit: MARC ISRAEL SELLEM)
The Knesset’s Reform Committee approved Finance Minister Moshe Kahlon’s bill on Wednesday, to decentralize the Israeli banking market. The bill which seeks to separate the credit card companies from the big banks that own them, passed a first reading in the committee and will be up for a second- and third-reading in the Knesset Plenum.
“I am glad that after so many years of only talking about a banking reform, we managed to pass a bill today at the Reforms Committee lead by MK Eli Cohen of Kulanu, Dror Strum and the Bank of Israel. With this move today, we are simply stopping the centralization of the banking market. I have no doubt that the citizens of Israel will enjoy this move due to better and cheaper services. Also we expect the high credit card commissions to either disappear or at least be lowered to very reasonable sums,” Kahlon told the press after the bill was approved.
According to Kahlon, the bill is expected to allow real competition in the retail credit card market in Israel by giving non-bank actors the possibility issue credit cards and clear payments. Allowing private entities to compete with the banks and with each other means that the new credit card retailers will have to vie for consumer attention by offering better services, attractive promotions, and lower commissions on credit transaction.
The bill was formulated based on a report by the Strum Commission on the Increase of Competition in Banking and Financial Services. The Strum Commission was assembled by minister Kahlon and Bank of Israel governor Karnit Flug in 2015 and headed by attorney Dror Strum, former chief of the Israeli Antitrust Authority.
“It is important to explain that ultimately it will be the Bank of Israel that will be charged with the responsibility to implement most parts of the reform, so it is therefore important that the Bank of Israel will lead, together with the Ministry of Finance and the Ministry of Justice, the enactment of the regulations in various areas. The Bank of Israel leads and will continue to lead this reform, professionally, with integrity, and focusing exclusively on the benefit of the public.” governor Flug told the Reforms Committee on Wednesday.
“Today’s vote was unanimous, the reform bill was supported by MKs from the opposition as much as the coalition. I imagine that the bill will also pass through the plenum vote, if not unanimously, under a considerable majority. We’re not expecting any major objections there,” Reforms Committee spokesman Shimon Malka told The Jerusalem Post.