Merchants Have No Right to Impose Fees on Credit Cards Usage
Do you know that Merchants Have No Right to Impose Fees on Credit Cards Usage?
I am Not aware that the Merchants CANNOT Impose Fees on users of credit cards as it is a common practice when shopping at Low Yat Plaza!
Low Yat Plaza is commercial shopping centre specializing in Electronics, Hand Phones and Information technology (IT) products in Malaysia.
Read more about Low Yat Plaza at Low Yat Plaza Car Parking Rate | Bukit Bintang Kuala Lumpur
Majority of the shops selling Information technology (IT) products at Low Yat Plaza impose 2% to 3% surcharges when payment is done via Credit Cards.
No charges if cash is use.
That is the main reason, I do not use Credit Cards when shopping at Low Yat Plaza.
I also have the habit asking the salesperson whether there be any charges if I pay via Credit Cards before using any Credit Cards payment.
By imposing extra charges, is is definitely a rip off and an “unacceptable practices by the merchants’’.
Just exercise you Consumer Right when it comes to merchants that imposing merchant fees!
It look like Very Little or NOTHING have been done to address this issues or Take Action against this Unethical Practice!
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Merchants can’t impose fees on users of credit cards
PETALING JAYA: Credit-card users who are told to pay extra if they use their cards instead of cash should be aware that merchants are not allowed to impose merchant fees on users as stipulated in the card associations’ operating regulations.
“Under the Bank Negara credit-card guidelines, banks are required to display prominently on the credit-card application forms their fees and charges table,” said Association of Banks in Malaysia (ABM) executive director Chuah Mei Lin. “Banks are also required to print on the monthly billing statements to credit-card holders information on the various charges imposed on the oustanding balances and method of computation of such charges.’’
A comparison of rates charged by banks can be obtained from the bankinginfo.com website.
RHB Bank head of retail banking, Renzo Viegas, said banks would act on complaints from cardholders on “unacceptable practices by merchants’’.
“For example, cardholders should not accept any imposition of surchange, report such incident to the bank or go to other merchants that do not impose surcharge,’’ Viegas said.
At Malayan Banking Bhd (Maybank), merchant activities are continuously monitored to curb incidences of surcharge.
“Appropriate action is taken on merchants who flout the rules,’’ said Lim Hong Tat, Maybank’s senior executive vice-president and head of consumer banking.
On leakage of customer information, Chuah said: “We wish to reiterate that member banks treat customer information with the greatest confidentiality and not sell or use information indiscriminately outside the confines of the banker-customer relationship.
“Banks will not hesitate to take disciplinary action and report employees who breach laws, regulations and policies.’’
In fact, members of the public are encouraged to contact the ABM in respect of any suspected breach of confidentiality on the part of member banks, Chuah said.
Education in card acceptance procedures is especially important in cases where merchants face high staff turnover. There is inhouse training and continuous education on adhering to charges and security issues.
from:biz.thestar.com.my/news/story.asp?file=/2009/11/9/business/5071427&sec=business
The above is only 1 side of the story. However, the world is not so “black and white”.
Well, put yourself at the other end: If you are the merchant and your profit margin is, say, about 5% for these FMG (fast moving goods); and you rely on this profit margin to cover your rental, staff and what not; and the credit card company is charging you 2% at least leaving you 3%, what would you do? Bear in mind that if you absorb the charges, you have to work extra 40% (because the credit card charges amount to 40% of your profit margin). It could translate to opening your outlet 40% longer; using 40% of your staff time; doing more A&P (which can also cost money); etc.
Would you run such a business? If these outlets were clamped down and the IT shops decided to close down, where are you going to get such IT goods at such a low, competitive price? And if they do close down, there will be fewer outlets and they will be at liberty to charge higher. Either way, the consumer pays for it. Just that, which way would you prefer?
I am not advocating such charges. Neither am I an IT products vendor. I am a businessman and I add value to the society but creating a service/product which I earn decent income for the service which I provide. And if the returns are going to be meagre, I might as well go play forex or stock and add no value to society.
I do buy IT products but I do buy from my favourite vendor who will give me a decent price for his products. I understand his profit margin and if he ask me to cover the credit card charges, I will. If he can’t sustain, I will have no more favourite vendor who understand my needs.
Buying something is a choice. You do have a right not to accept the transaction as a customer if the credit card charges imposed are not acceptable. Likewise, the vendor can also choose his customers.
Vendors nowadays are wise to the term “The customer is always right” – just that they will subtly not choose you as their customers the next time around.
A bank officer has mentioned in some media which I forgot: If you intend to pay by credit card, it is only fair that you let them know in the beginning so that they can factor it into the price you buy. It is not fair that you squeeze them to the rock bottom where they make so little. After that, you pull out your credit card and then demand them to accept. That leaves them little choice but to tell you: “No deal”.
Imagine you are an employee and your employer pull such a trick on you? I bet you will cry heaven and hell and get the labour department after them.
C’mon. Wake up! Vendors are human beings with families to feed. Have a heart. If their profit margin is high, no issue. But IT industries, no way.
If the above bank officer can understand more than beyond the letter of the law, I think we should have some understanding too. If you are not sure whether the industry are extremely competitive to have such low margins, we can easily find out, now that we have Google.
The world would be a better place if we don’t squeeze the stuffings out of each other and not care if the other die or not. (Even the show “2012” advocates such humanitarian practices).
hi AlexLeow,
You have made a Good Points.
The extra Fees on Credit Cards Usage is not limited to IT Industries.
Even some Car Services center also impose extra 2% charges when payment done via Credit Cards.
Anyway, The merchant always have a choice NOT to use credit cards as a mode of accepting payment.
No Banks is Forcing the Merchant to do so!
Why merchant choose credit cards as a mode of accepting payment?
Increase credibility and potential increase of Sales due to ease of customer making payment.
Just imaging paying your travel agent cash RM6,000- RM12,000!
To my knowledge, if ever a merchant pass the charges to the customers, it is because their margin cannot absorb it. As a bizman I am no fool to do a bad deal. If I know that a transaction does not cover enough for me to do it, I would rather not do it. If fact I might just be devilish enough to refer it to my competitor. Then I will have one less competitor in the long run if he is foolish enough to take on the deal out of desperation. 🙂
In a competitive world, bizmen as a whole don’t charge unnecessarily if they are genuine reputable people.
If I didnt read your post I would have voluntarily accepted those fees, thinking those are what I should pay o.0
But sometimes it’s unsafe to bring so much cash with you, so maybe it’s reasonable to use your credit card to purchase items
Let me give you an idea what will happen it ever the authorities take action on them for the above: These people have associations and they will gang together and create a new price for each and everyone of their product factoring in the credit card charges.
Then the next time they meet a customer who want to haggle, they will ask the question: “You are paying by cash or credit card?”
If you pay cash, they will allow you the cash discount, removing the credit card commission charges. If you pay by credit card, you will get little or no discount.
And if anybody forget to ask for discount when paying by cash, the merchant simply pockets the difference.
So which situation would you rather prefer?
Merchant can remove this “unacceptable practices” simply by NOT Using(offering) credit cards as a mode of accepting payment.
The problem is when Merchants INSIST wanna use credit cards facilities as a mode of accepting payment and do not wanna bear the bank charges
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Or consumers can choose not to use the credit card and get the a better deal. Simple as that. Frankly, merchants would rather receive cash or bank transfer. I would. That’s for sure. So easy now with Maybank and GIRO. Max is RM2.00.
Traders Not Allowed To Impose Surcharge On Credit Card Purchase
KUALA LUMPUR, Nov 23 (Bernama) — Traders, in principle, are not allowed to impose a surcharge on purchase made using credit cards, the Dewan Rakyat was told on Monday.
Second Finance Minister Datuk Ahmad Husni Mohamad Hanadzlah said the restriction was in line with the regulation set by credit card brands such as MasterCard Worldwide and Visa International, and the terms spelled out in the agreement between traders and merchant acquirers.
“Card holders can actually inform the merchant acquirers or credit card issuers on the surcharge by submitting proofs, such as receipts, so that investigation can be carried out.
“Card holders can also choose not to buy from traders who impose the surcharge,” he said in reply to Datuk Abdul Rahman Dahlan (BN-Kota Belud) at the Dewan Rakyat on Monday.
Abdul Rahman wanted to know whether traders were allowed to impose a surcharge of two per cent for purchase using credit cards, and described such an act as a “daylight robbery.”
To a question from Teo Nie Ching (DAP-Serdang) on the rational for the annual RM50 service tax imposed on principal credit cards, Ahmad Husni said it was to promote prudent spending.
He said many individuals were holding a number of credit cards despite their limited income. — BERNAMA
from:bernama.com/bernama/v5/newsindex.php?id=457325
While one can say Merchants have no right to impose surcharges, blah, blah, blah; and while also the top people can politicize about it; I bet you that almost all the people who make the hoo-hahs will end up paying the surcharges anyway if they want the product or services badly enough. No merchant is ever going to be so stupid as to sell something below cost – unless they want to go out of business! To my knowledge, if they really cannot cover cost, they will politely refuse your business.
To my knowledge, no merchants have insisted on credit card payment unless it is via distance payment which is to their disadvantage. In fact, they prefer cash and with that, a discount is given. IF YOU DON’T WANT TO PAY THE CREDIT CARD CHARGES, OFFER TO DO A BANK TRANSFER OR GIRO. Then fax/scan them the tranfer document. I have done that with no problem.
If you think they have no right to charge, consider what Confucius said: “Do Unto Others As You Would Want Others To Do Unto You”. If you are the businessman, would you accept the card if it is going to make you run into losses?
Hi Alex,
Do You know Air Asia charge “CONVENIENCE FEE” of RM5 per flight if one books a ticket via credit/debit card!
We made the booking ourselves, pay our electricity and internet service and key in the booking ourselves and make payment by ourselves, what rights do they have to collect convenience fees?
By online purchase, we are giving them the convenience, not the other way round.
In fact, this is a Day light robbery!
Don’t the merchants(Air Asia) wanna to minimize the cost & service at Counter like what Bank did with the aggressive promoting online banking & more ATMs?
Just take a visit to Air Asia’s counter ticket at KL Sentral, KL, look for yourself how long it take just to buy a ticket!
There’s always other modes of transportation if paying for the surcharges & so called “low fares” is an inconvenience. If you really need their services, go with the flow or work your way up to lobby for the abolishment of this inconvenience. Alternatively, start another airline.
It is not unusual for many companies to make only a few percent nett profit. These companies exist to provide employment for a huge number of people. Imagine what would have happened if Tony Fernandez makes a decision to shut down AA and sells off the planes once people lobbied for the abolishment of the 2% or therabout credit card charges? In a free enterprise world, if a service provider does not get due returns for the value added just because of some ‘righteous’ letter of the law, that service or product will cease to exist and along with it, the salaries and incomes of the hundreds of service providers. If everybody fights for the ‘so called’ rights and win, lots of people will be out of jobs. Then what?
Start another airline?
This is a Good idea 🙂
Then, there will be another player in the market: Alan Airlines (AA), right? And now, even the hardcore poor who can’t own a credt card can fly too, right? 🙂
Banks have said that merchants are not supposed to levy this surcharge!
Why Air Asia charge “CONVENIENCE FEE” of RM5 per flight if one books a ticket via credit/debit card?
Who is above the Law?
Can we have lower credit card surcharges?
————————————————–
MUCH has been said about merchant credit card surcharges. I have received emails expressing frustration at having to pay extra on purchases of computers and related parts and accessories, air tickets and at restaurants.
In all this, one thing is clear – usage of credit and other cards is already a way of life for many.
“I love using credit cards as I prefer to carry less cash with me,” wrote a reader.
Complaints surface as to why no action is taken by the relevant authorities, with another reader questioning the legality of this surcharge imposition by merchants.
Relating his experience while holidaying abroad, he said merchants faced the possibility of being fired or having their terminals confiscated if they tried any “hanky panky.”
Banks have said that merchants are not supposed to levy this surcharge on customers who have been advised to report such incidents.
The problem is more acute among the smaller merchants which are desperate for the business and unable to absorb the extra cost.
The card surcharge of 1.3% to 3%, depending on the volume of business and other factors, is imposed on merchants as an interchange fee.
Interchange fees are levied when merchants accept cards using card networks such as Visa or MasterCard for purchases.
The breakdown of this fee is unclear but a component is said to be infrastructure cost.
Questions have been raised on whether this infrastructure cost can be lowered or shared among merchants.
Could the smaller merchants consider some form of consolidation and sharing of card infrastructure?
While the large merchants have the leverage to negotiate rates, the smaller merchants often end up with higher rates.
A reader recounted: “I bought a handphone for my wife and was charged 3% for using my credit card.”
Banks could also find ways to bring down the interchange fee, possibly by working with network providers on possible localisation of operations.
With competition and improvements in the electronic payment system, the benefits should be passed on to the smaller players.
In line with enhanced consumer education, there should be more transparency in the breakdown of interchange fees, which reports indicate, could be apportioned between the card issuing bank, network provider and processor.
Granted that it is subject to negotiation between merchant and bank, there is no harm in customers knowing just what they end up paying for in the final amount.
** Senior business editor Yap Leng Kuen realises that interchange fees is a controversial subject especially in countries with high credit card consumption.
In the development towards cashless transactions, the problem related to the imposition of credit card surcharge on customers should be given immediate attention and not left to market forces.
from:biz.thestar.com.my/news/story.asp?file=/2009/12/2/business/5217275&sec=business
I disagree with ALex Leow regarding the merchant ONLY earn 5% profit for the fast moving good and it will cause the vendor into bankrupcy.
For example, I did do price survey for some similar good for some IT product from the same company for a period of 6 months. For example, the price for a media player 3 months ago was RM499 and now only RM399 and it is the similar product and date produced because my friend bought it 3 months ago. And I bought it 3 months after and when we compared, everything like date of production are all the same.
If you are the merchant, are you risking your money just for 5% profit? 5% profit only for cheap product and they earn quite a lot from others.
The new computer shop is open one after another and getting bigger. You are saying the business are not profitable?
When a boss do business, when they earn a fat profit, they will tell you earn a little only.
They are not going to go bankrupt just by losing 2% profit, in fact they earn if customer is using credit card as bank is charging them less than 2%.
I agreed with coke. Despite AlexLeow is not selling computer but he is a businessman. Normally businessman earn BIG profit from what they are selling. Even a product with 80% discount, they will still earning profit. Businessman NEVER do business with no profit. His point in supporting the vendor is weak an unacceptable. Please don’t believe his point. As far as I know, the bank only charge very much less than 1% when credit card is used.
I doubt taliworks and coke are into business. To clear matters up once and for all, I challenge them to go make enquiries to get Credit Card merchant facilities and then find out the cost of credit.
As for IT products, it would be a good idea for them both to try out being an IT vendor and see if they can run an IT business and still maintain profitablity. Only after a deeper understanding of what goes on, then all these statements will not surface.
If the IT vendor you mentioned only earned a miserable 5%. Let us see after 1 year implementation of cancellation credit card charges 2-3%. How many IT vendor go bankrupt? I do not need to involve myself in the IT business just to convince you.
Some of the IT shops in the Low Yat are from the same company and boss. I use to ask same IT from the shop, both side gave me different discount but when u pay, u r paying in OTHER shop cashier.
Another example is PC fair, see how many vendors are participated? How many booths are selling the same things? How many staffs they employed? The common price in KL Convention Center is about 4k/9m square. So you need to sell 27K/day just in order to cover the cost (with your 5% profit). 27K is just for break even. Add on other cost…..Do you think all these cost can be covered with 5% PROFIT?
Even the bank is charging them 5% transaction fees, they will still survive very well. They are far more richer than anyone of us here. The point here is they have NO right to charge customer extra unless it is allowed by the law. This is our rights as a customer. These are common sense…..5% profit and working 40% more time just because credit card charges 2-3% is not making sense at all.
Obviously some readers here skipped the word “Nett” Profit. & so many points brought up are assumptions about the business world. It’s hard to deal with or make headways with assumptions; and can be very tiring to deal with too.
So I shall keep the business secrets to myself; make money quietly and let people keep their own belief systems. I have said what I have said and advised using the heart but apparently, righteousness reigns. Righteousness in a world of sharks will only end up with the righteous being eaten. So let it be.
Please go ahead and fight for the abolitions of surcharges & have fun along the way if you can.
I agree fully with what AlexLeow got to say. In some industries or sectors, the competition is so keen that margin is razor thin. Also in some industries, price keep on dropping over time like IT hardware and the item get obsolete very fast with newer version getting better with more features and may be even cheaper. It is a very difficult industry to be in and even big name comes and goes.
Officially in black and white, it is true that merchants have no right to impose fee on credit cards usage. But unofficially banks also understand that in some industries the margin is so low due to competition that merchants need to pass on the fee to customer. I suppose it would be complicated for banks to say or classify which merchants could impose fee and which not so that the best is officially to state all merchants have no right to impose fees.
Of course, there are a few IT vendors who because of volume could get their products at much lower cost and these may not impose fee for the credit card usage.
I got friend involved in selling IT stufff, exit the industry after doing for more than 10 years in Plaza Yow Latt.
Reason: Higly competition and low margin
After 1 year plus, the computer vendors in the low yat still surviving very well and in fact expanding their business. So the fees on credit card does not affect them. In fact, they do have good practice where the customer need to present their IC for verification.
No matter how you look at it, there is very very high propabilities that AlexLeow himself is involve in IT business (which he claimed that he is not) that charge credit card merchant fees. Don’t blame the competition as a reason to do unethical things, you have a choice to do bad things or good things.
CBB with naive people.
IT products too cheap, say retailers
A large group of information technology retailers in the country is claiming that IT products, namely laptops, desktop computers and peripherals, are too cheap now.
They said the pricing margins were very thin and their businesses won’t be able to survive unless the prices of the products were raised by between 12% and 15%.
The group claimed that the frequent number of IT trade fairs and the Government’s policy of handing out laptops to students were also taking a huge toll on their businesses.
Their other grouses include price protection/rebate claims, stock commitments set by the product manufacturers, and a lack of representation by the National ICT Association (Pikom).
The group wants to form its own association of IT retailers to fight for its demands and safeguard its interests.
Chin Boon Long, managing director of 1 Utopia Bhd in Petaling Jaya, mooted the idea of forming the breakaway association during a forum at a hotel in Kuala Lumpur.
The forum was attended by about 140 retailers, and more than 100 voiced their approval and signed a petition calling on other IT retailers nationwide to lend their support.
There are some 5,000 IT retailers in the country, according to Pikom.
Among the retailers who supported the move were Irene Sau, chairman of the Penang ICT Association; Kevin Chan, chairman of the Ipoh IT Association; and Simon Kong, vice-president of the Kuching Computer Business Association.
“Once the association is set up, it will seek to negotiate with the product manufacturers on the various issues,” said Chin.
He also said having too many IT fairs was not good for retailers because people tend to wait for these fairs to come around.
“And since there are so many fairs, they don’t have to wait long,” he added.
The group said there were now nine IT fairs in the Klang Valley alone each year. They want it cut down to just three.
One retailer at the forum, who wanted to be known only as Johnson, expects the new association to force all IT retailers under its banner to adhere to fixed pricing.
Pikom executive director Ong Kian Yew, who was at the forum, said Pikom was committed to taking on the issues raised by the retailers at its next council meeting in two weeks.
This is not the first time that IT retailers have splintered from the national association.
In 2004, the ICT Science Association of Malaysia was formed by a group of disgruntled PC vendors who had disagreements with Pikom.
fr:thestar.com.my/news/story.asp?file=/2012/9/28/nation/12094269&sec=nation