Room for lower card interest rates, commissions, says regulator in new study

Thursday, November 24, 2011

Interest rates and commissions for credit and debit cards in El Salvador could be lower if greater competition existed in the market, according to a study released by local competition regulator SC.

The study found that the credit card business is dominated by four issuing banks which account for approximately 90% of the market: Agricola, Banco de América Central, Citibank and HSBC.

Furthermore, credit cards are the most profitable business for Salvadorian banks, with interest rates 54% higher than costs. SC said that this level was "supracompetitive", or above what can be sustained in a competitive market.

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The study also found that commission charges for card use were very high and could be lower if greater competition existed between both issuing and acquiring banks.

To read the full report, in Spanish, go to this link