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Competition in Postal, Courier and Financial Services Industries

Abstract

Postal services, i.e. the clearance, sorting, transportation and delivery of postal items, still remain an important part of the country’s economic and social development. In addition to being some of the oldest and most widespread means of communication, they are also rapidly and extensively changing services. The postal services sector covers several change drivers. Changing demand, i.e. the declining demand for letter-post items, the growing demand for postal parcels; organisational changes, automation and new technologies; and the increasing use of electronic means, is considered the most significant change driver in the postal services sector. Taking into consideration the above-mentioned changes, new postal services are constantly being developed both internationally and nationally.

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Notes

  1. 1.

    Directive 97/67/EC of the European Parliament and of the Council of 15 December 1997 on common rules for the development of the internal market of community postal services and the improvement of quality of service. Official Journal L 015, 21/01/1998 P. 0014–0025. Retrieved from http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:31997L0067

  2. 2.

    One group of industrialised countries and five groups of developing countries (Africa, Latin America and Caribbean, Asia Pacific, Eastern Europe and the CIS and Arab countries).

  3. 3.

    A Green Paper is a document published by the European Commission on a specific topic and is intended to invite interested parties to respond on different issues. The European Commission’s objective in publishing the Green Paper is to better identify the future lines of its policy guidance on a specific issue.

  4. 4.

    The European Commission Green Paper promotes an integral parcel delivery market for the growth of e-commerce in the EU. COM(2012) 698 final.

  5. 5.

    Communication is a nonbinding policy document. The European Commission takes the initiative to publish a communication to present their position on any important issue. Any such document has no legal force.

  6. 6.

    Traditional postal services refer to universal postal services and the delivery of postal items to recipients and to their incoming mailboxes.

  7. 7.

    The volumes of items delivered between 2009 and 2013 were recalculated, applying the method by which calculations of the total volume of the services exclude the received domestic items.

  8. 8.

    To the extent necessary to ensure the permanent provision of universal services, the services reserved for a universal postal service provider were the clearance, distribution, transport, delivery and handing in of items of domestic correspondence, direct mail and incoming cross-border items of correspondence within the established weight and price limits. As of 1 January 2006, the weight limit of 50 g was applied to the postal items within the reserved area. Until 1 January 2013, providers of postal services were obliged to provide reserved postal services by applying a tariff of at least two-and-a-half times the tariff for a letter-post item in the first weight step set to a universal postal service provider.

  9. 9.

    Domestic market is a market that covers the territory of the Republic of Lithuania. Domestic postal item is an item that is sent or received within the territory of the Republic of Lithuania.

  10. 10.

    According to Article 14 of the Postal Law, which entered into force on 1 January 2013, UPS shall include the clearance, sorting, transportation and delivery of postal items of up to 2 kg; the clearance, sorting, transportation and delivery of postal parcels of up to 10 kg; the clearance, sorting, transportation and delivery of registered or insured postal items; and the delivery of postal parcels of up to 20 kg received from the other member states of the European Union.

  11. 11.

    These characteristics were established by Order No. 3–46 “On the Approval of the Characteristics of the Public Postal Network of the Provider of the Universal Postal Services”, issued by the Minister for Transport and Communications of the Republic of Lithuania on January 25, 2013.

  12. 12.

    Order No. 3–128 “On the Approval of the Description of the Requirements for Quality of Universal Postal Services”, issued by the Minister of Transport and Communications of the Republic of Lithuania on 28 February 2013.

  13. 13.

    According to paragraph 5 of Article 12 of the Postal Law, in case postal items become lost or damaged, articles (merchandise) are missing or damaged therein or articles (merchandise) are damaged through the fault of a postal service provider, the latter shall pay the compensation: (1) for a loss of a registered postal item as well as for a part or the whole quantity of lost or damaged articles (merchandise) contained therein, the compensation must be estimated by the amount equal to double posting expenses; (2) for a loss of an insured postal item, the compensation must be estimated by the amount equal to posting expenses plus insured value; and (3) for some of the contents lost or damaged in an insured postal item, accompanied by a list of contents, the compensation must be estimated by the amount equal to posting expenses and the value of the lost or damaged article (merchandise), indicated in the list of contents, but the value of the lost or damaged article (merchandise) must not exceed the insured value of the whole insured postal item.

  14. 14.

    The detailed description of Standard LST EN 14012:2009 can be found on the website of the Lithuanian Standards Board.

  15. 15.

    The standard time periods for investigation of complaints by LUSP are as follows: (1) no more than 30 calendar days for the complaints about domestic UPS and other postal services; (2) no more than 40 calendar days for the complaints about cross-border postal services, provided between the developed countries; and (3) no more than 60 calendar days for the complaints about cross-border postal services, provided between the countries other than the developed countries.

  16. 16.

    Concentration means a market situation in which economic activity is concentrated under the control of one or several firms, in other words, when a small number of firms occupy the largest share of a particular market.

  17. 17.

    The concentration level ratio CR4 indicates the market share of the four largest market players in an industry as a percentage.

  18. 18.

    The concentration level ratio CR8 indicates the market share of the eight largest market players in an industry as a percentage.

    CR values: (1) a value close to 0 % means perfect competition, excellent conditions for competing or very insignificant monopolistic competition, i.e. the four largest firms do not have any significant market power; (2) a value below 40 % means effective competition and low concentration in the market; (3) a value below 70 % means medium concentration, similar to an oligopolistic market; (4) a value above 70 % means high concentration, the market ranges from oligopoly to monopoly; and (5) 100 % means an extremely concentrated oligopoly, i.e. CR1 = 100 % reveals predominance of monopoly.

  19. 19.

    HHI shows uneven distribution of market powers of all market players and is the best-known and most important index of the intensity of competition in the market. HHI is directly proportional to concentration (i.e. when the latter increases, the former increases as well, and when the former decreases, the latter decreases as well). The lower is the HHI, the higher is the level of competition, and vice versa: the increase in the HHI indicates a decrease in competition and an increase in market power. HHI values: (1) HHI < 1000 indicates an unconcentrated market; (2) HHI between 1000 and 2000 indicates moderate market concentration; and (3) HHI above 2000 indicates high market concentration.

  20. 20.

    The surplus value, which is generated in logistics sector, divided by the stuff expenditures.

  21. 21.

    Payment services are defined as the services which are provided in order to afford the possibility of depositing the cash in the account and drawing it out of the account, remitting of the means including remittances of credit, operations of direct debit and also the use of a payment card or other analogous means of payment.

  22. 22.

    In 2015 the company plans to implement the service of a payment account, i.e. possibility to open payment account in LUSP. Together with this basic service, they are going to suggest obtaining of the one book (the service, which is connected with arranging of the payment document or order, which would unite all the rates) and electronic self-service. The company plans to publish the local payment card. From 2015 they intend to implement the functional platform of the LUSP domestic payment card, so first of all the company must sign the agreements with their partners on acceptance of the LUSP payment card in the places where they provide their services and also with FDL on using cash dispensers. The company is ready to offer such card to the clients in 2015. Reference: the strategic plan of the LUSP for the period from 2015 to 2019.

  23. 23.

    Noncash or cashless payment transactions comprise of domestic and cross-border payments initiated by a payer or a beneficiary for the processing of which the following payment instruments are used: credit transfers, direct debits, payments by cards with a debit/credit function, virtual cards, electronic money or cheques.

  24. 24.

    Payments by cards with a debit/credit function include payment transactions performed by cards with a debit/credit function issued in Lithuania at a terminal, via the Internet or by telephone. Cards with a debit function are the cards issued in Lithuania by a credit institution or payment institution that allow direct debiting of funds from the account of the cardholder. Cards with a debit function may be linked to an account that offers overdraft facilities. Cards with a credit function are the cards issued in Lithuania by a credit institution or payment institution indicating that the cardholder has been granted a credit line. They allow the holder to make purchases and/or withdraw cash up to a prearranged ceiling. The credit granted can be settled in full by the end of a specified period or can be settled in part with the balance taken as extended credit. Interest is usually charged on the amount of any extended credit.

  25. 25.

    Credit transfers are payments initiated by a payer where a payment instruction submitted to the payer’s credit institution or payment institution is processed to transfer the payer’s funds to the beneficiary’s account at a credit institution or payment institution. Credit transfers also comprise payments initiated by a payer, performed through ATMs using payment cards issued by credit institutions or payment institutions, and postal orders.

  26. 26.

    The data include the payments where the payer or the beneficiary is a natural person or a legal person that is not an MFI or payment institution.

  27. 27.

    Direct debits are one-off and/or recurrent payments initiated by a beneficiary where a payment instruction submitted to the payer’s or the beneficiary’s credit institution or payment institution is processed to transfer the payer’s funds to the beneficiary’s account at the credit institution or payment institution. The beneficiary has a right to submit a payment instruction if it has a written consent by the payer to debit funds from its account.

  28. 28.

    In 2011 such a new category of the conveyors of payment services as payment institutions appeared in Lithuania, so, since the first quarter of 2011, the information about payment institution has been presented. The information about credit remittances includes the remittances which are initiated in payment or electronic money institutions and which are mostly initiated in paper.

  29. 29.

    Credit transfers via an electronic data transmission network are payment orders initiated and submitted to the credit institution or payment institution by the special personal computer software installed in the payer’s computer. Credit transfers via the Internet are payment orders initiated and submitted to the credit institution or payment institution using the software from the credit institution’s or payment institution’s Internet site. Credit transfers via telephone are payment orders submitted to the credit institution or payment institution by telephone by dialling tone, activated voice, person–person or other ways of communication. Book-entry credit transfers are transactions on the account of a customer by a simple book-entry without the use of a payment instrument, e.g. interest payments by the credit institution or payment institution.

  30. 30.

    The increase was mostly caused by the fact that payment institutions were included in the official statistics. Despite the fact that the services connected with collecting fees, which are provided by payment institutions, are regarded as remittances by law, such operations are treated as credit remittances considering the statistics.

  31. 31.

    Domestic cards are the cards valid only in Lithuania, while international cards are the cards designated for use in Lithuania and abroad.

  32. 32.

    A payment card scheme is a set of rules applied to payment transactions, procedures, standards and (or) implementation guidelines, controlled by a particular institution or organisation.

  33. 33.

    In 2012 the ECB report on the damages, which are caused by frauds with payment cards, declared that the proportion of the damages due to frauds to the total return from the operations using the payment cards, which are issued by Lithuanian PSPs, made 0.005 %, which is one of the lowest indexes in the SEPA area, where such proportion was on an average of 0.038 % in 2012. Lithuania got such result due to such new technological concepts as observation of the operations, additional passwords while purchasing online, limited operations in the regions, where the EMV standard has not been applied yet, etc. which are used by the conveyors of payment services, and comparing with other countries of the EU low extent of the operations using payment cards in the trade places and while paying in electronic shops. The greatest amount of damages, which were caused by the fraud with payment cards, which were issued in Lithuania (40 %), took place because of illegal use of the cards in Internet trade; 30 % come relatively to payments in physical trade places and while dispensing the cash using cash dispensers. In the cases when cheats tried to use the payment cards, which were issued abroad, in Lithuania they usually (68 % of all the damages) did that in physical trade places. Aiming at strengthening of the safety of the means of payment, which are used in electronic trade, the bank of Lithuania prepared the minimum requirements for the security, which are to be realised by PPS in 2015. The document was prepared with the reference to the ECB recommendations to the security of the payments, which are made by the Internet.

  34. 34.

    The commercial banks, credit unions and the branches of foreign banks, which have the licences issued by the Bank of Lithuania

  35. 35.

    Are valid only in the Republic of Lithuania and suppose that the average sum from the payment operations, which have been performed for the recent 12 months by the payment institution, would not be higher than 3 million euros over the month.

  36. 36.

    The mediator of the payment institution is defined as the physical or juridical person, who provides payment services in the name of the payment institution.

  37. 37.

    The company, which sells goods or services using electronic systems, and the one, which trades in physical places, will request for different means of settlement.

  38. 38.

    The linked consumer credit is defined as the consumer credit agreement which is clearly formulated and enables the giver of the consumer credit to permit the receiver of the consumer credit to manage the means exceeding the available balance of the account of the receiver of the consumer credit in the form of a consumer credit.

  39. 39.

    Consumer credits under overdraft agreement are defined as the consumer credit contract, which prescribes that (1) the consumer credit is used for financing of the contracts, which are signed on the purpose to provide the particular services or supply the particular goods and (2) the contract for providing services or supplying goods and the consumer credit contract make the single commercial contract. The contract for providing services or supplying the goods and the consumer credit agreement are considered to be the single commercial contract when at least one of the following conditions is available: the supplier of the goods or the provider of the services finances the consumer credit, which is allowed to the receiver of the consumer credit, on one’s own; the issuing of the consumer credit is financed by the third party, which uses the services provided by the provider of the services or the supplier of the goods while preparing or signing the consumer credit agreement; and the particular services, which are provided, or the particular goods, which are supplied, are named in the consumer credit agreement clearly.

  40. 40.

    The small consumer credit is defined as the consumer credit, which is paid according to the consumer credit agreement, accepting an account lending contract or a coherent consumption credit contract, when the sum of the consumer credit, which is paid to the receiver of the consumer credit, is not larger than 290 euro during the period when the consumer credit is available.

  41. 41.

    Private enterprises, cooperative companies, public institutions, associations, charity and relief funds, social organisations, professional unions, partnerships, religious communes and the communities of blocks of flat dwellers

  42. 42.

    The saving notes of the 1-year maturity have been distributed since 19 May 2009; the saving notes of the 2-year maturity, since 13 December 2011; and the saving notes of the 3-year maturity, since 30 October 2012.

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Pilinkienė, V., Deltuvaitė, V., Daunorienė, A., Gaidelys, V. (2017). Competition in Postal, Courier and Financial Services Industries. In: Competitiveness Creation and Maintenance in the Postal Services Industry. Springer, Cham. https://doi.org/10.1007/978-3-319-31906-3_3

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