Mexico says credit, debit card settlements a near monopoly

MEXICO CITY (AP) - Mexican regulators said Wednesday that the two firms handling the country's debit or credit card settlement process represent a near monopoly, and have recommended that leading banks be forced to sell off their ownership share in the companies.

While many banks issue cards in Mexico, only two firms actually process and settle such electronic transactions. Eight private Mexican banks own a large share of the settlement and processing firms, thus gaining an unfair advantage.

The federal Commission on Economic Competition said the lack of competition has resulted in high processing fees, and reduced the incentive for investment in new and safer systems to handle transactions and avoid system breakdowns.

It said the combination of high fees and bad service has kept many consumers and small businesses out of the card transaction system.

Mexican card systems are prone to frequent breakdowns that prevent consumers from using their cards, or make them more vulnerable to fraudulent transactions.

The commission cited the extremely lengthy and unclear requirements for new firms seeking to enter the market, and called on the government to ease the entry of new competitors.