Fintech firms say a gambling payment fee cap could breach EU law and place pressure on the industry.
The Bulgarian Fintech Association (BFA) has demanded the removal of a proposed state levy on gambling transaction fees exceeding 1.5%.
The proposed Gambling Act amendment would require financial institutions to surrender excess revenue, with any fees over 1.5% on gambling transactions going to the state, as reported by SBC News.
Under this model, if a user deposits €1,000 and the payments platform charges a €30 fee (3%) for the transaction, it could keep a maximum of €15 (1.5%) as revenue before surrendering the remainder to the state.
Payment providers would be required to submit mandatory monthly reports, allowing the government to track processing fees and ensure compliance.
BFA comes out fighting
The BFA, representing more than 80 companies and other participants in Bulgaria’s fintech sector, has said the provision should be removed from the draft legislation.
In a detailed opposition, the association said the measure would embody “a significant interference in the economic relations between private-law entities operating on an equal footing”.
It said directing fees above the 1.5% threshold to the state would limit payment providers’ ability to set prices based on market conditions.
The BFA also questioned the proposal’s compatibility with European Union law.
“By imposing an artificial constraint on the economic conditions under which a specific category of providers may offer their services, the measure limits their freedom to determine their own market strategy and places them at a competitive disadvantage,” the BFA said.
“Consequently, it creates barriers to the equal participation of payment service providers in the Single Market, including with regard to the cross-border provision of services.”
The association also questioned whether the provision complies with Bulgaria’s constitution, arguing that it would impose a financial burden on private companies that is neither a tax nor a state fee.
Another concern is the lack of a clear justification for the 1.5% threshold. According to the association, the draft doesn’t explain how it calculated the figure or why remuneration above that level should be transferred to the state.
The BFA also stressed that payment providers’ fees don’t only represent profit, but cover the costs associated with delivering payment services.
While gambling operators would see a reduction in costs, payment providers could offset this revenue loss in other parts of their business. The BFA says this could land on consumers.
Bulgaria’s fintech sector
Bulgaria’s fintech sector, like in many countries, has become a significant contributor to the economy. According to Fintech Bulgaria, the industry generates over €900m in revenue and accounts for about 1.5% of gross domestic product (GDP).
The country has 156 fintech companies operating across the market, employing more than 9,000 people.
The proposed gambling payment fee cap could have an impact on an established part of Bulgaria’s financial services industry, namely banks, payment institutions and electronic money firms that process gambling-related transactions.
The BFA warned that redirecting fees above the proposed 1.5% threshold to the state budget would disrupt commercial pricing and put additional pressure on payment providers.
