Bulgaria has proposed a new reform that imposes a 1.5% cap on the net fees payment facilitators like banks and e-money institutions can retain from gambling transactions.
This represents a novel fiscal instrument for the European Union (EU) that targets the national payments infrastructure rather than the gambling operator layer.
The draft rule establishes that if a bank, a payments institution or an e-money company taxes anything else above the 1.5% threshold for two types of gambling-related transactions – either a deposit or payout of winnings – the excess goes straight into the state budget.
“When a payment institution, bank or e-money company charges and receives remuneration (fee, commission or other form) for a payment operation for accepting funds for participation in gambling games and for paying out winnings, whose total amount exceeds 1.5% of the value of the respective payment operation… the difference exceeding this percentage is paid into the state budget,” the draft states.
In practice, if a user deposits €1,000 and the payments platform charges a €30 fee (3%) for that transaction, the latter will be allowed to retain a maximum of €15 (1.5%) as corporate revenue, with the rest funding the state coffers.
Under the proposed provisions, the processing fees will be strictly monitored through mandatory monthly declarations and record-keeping duties for payment providers.
If the rule comes into force, one possible outcome would be a general decrease in gambling payment fees to 1.5%, which will also reduce the cost for the end-user.
As the primary motive behind the decision, policymakers outlined that they want greater responsibility from the entities that generate revenues from the provision of gambling-related payment services.
The impact assessment of the proposed measure added that due to the large volume of gambling transactions and the key role of payment processors in facilitating these transactions, a mechanism must be adopted to recognise that role.
That mechanism would in essence utilise the premium fee that comes with the processing of gambling payments – considered high-risk in Bulgaria – and use it to increase the national budget revenues, which in theory could then be used to fund problem gambling initiatives, although there is no specific mention of the intended allocation yet.
The consultation will be open for public discussion until 23 October.