5% Fee on Credit Card Payments

[carteki]

I'm wondering if anyone in this forum has the "official" take on this - ie from the credit card companies themselves. I have long understood that it is a standing requirement by the credit card companies (and from one person I know that it is part of his contract) that they are under no way allowed to charge "extra" for accepting a credit card as payment. Yet it is becoming more and more common. Not even in countries like Indo and PH - but recently I was charged 5% extra in London! So have the credit card companies changed their tune - or are these companies just trying to get a fast buck?

[BillyB]

It's partly a direct result of the banks charging 'merchant fees' for providing payment processing, although it's all a bit opaque as to how much the banks actually charge the retailers.

IMO it's a clever way to increase the overall price of a good - take Air Asia for example, they have a ridiculous credit card processing fee, and with the volume of business they generate, there is NO way the banks / card companies charge then $5 or 10 sgd to process a credit card transaction.

It's called taking the piss, but until it's formally challenged by enough people, the loophole will remain.

[stueyhall]

Merchants are free to charge what they want as part of their price. Some of that charge would be to cover for MSF (Merchant Service Fee) that banks charge but no bank would be charging 5%. Most large corporates in my experience would pay more like 1% to the banks but they might argue that 5% covers the additional costs to provide the payment platform, ie website portal, security etc

Its legit they can charge it, but what riles me is when the merchant in the street blames the banks and says its a bank charge and they are responsible. Also whenever there is a minimum charge to use your card it is always just a company rule and not a bank rule, you can put 1c through a terminal - you just wont make any money.

[aster]

In Singapore it's not unusual to see discounts that only apply to cash/Nets payments. I think the John Little department store has some sort of loyalty card that gives discounts... but only for the above-mentioned payment methods.

[beppi]

A long, long time ago, I heard that merchants' contracts for charging credit cards contain a clause that disallows charging extra fees based on the payment method (i.e. they can't charge extra if customer uses card vs. cash).
Since Singapore taxis started charging 10% extra for card payments, I have several times sent enquiries to credit card issuers and banks asking if this is allowed and what I should do if not.
I have not a single time received a useful reply to this!
Usually, if they reply at all, they refer me to another party (VISA says ask your bank, the bank says ask VISA).
My conclusion is that they purposely want to keep this topic unclear, so they can do and charge whatever they want.

[carteki]

A long, long time ago, I heard that merchants' contracts for charging credit cards contain a clause that disallows charging extra fees based on the payment method (i.e. they can't charge extra if customer uses card vs. cash).

I've heard a merchant complain about this clause (recently) - and it is the reason he doesn't offer a credit card payment facility. It was my understanding that this clause is fairly standard worldwide - hence my question if there is anyone on the forum who can confirm / deny this.

[zzm9980]

I've worked for a major credit card company, and for a major payment processor. At that time it was like this:

Visa and Mastercard do not allow price discrimination against their cards (e.g, additional fees to use a card) except for in markets where the law allows it. (Not sure if Singapore is one). American Express's rule is that it is allowed, but cannot be exclusive to American Express. So if the merchant charged a fee to use a Visa/MC (in violation to their rules), then they can for Amex. But only then. Enforcement is another question of course, and rarely occurs. When I used to have too much free time, I'd constantly report merchants that tried to do this to me. A few actually stopped doing this. Most didn't as I'm sure they just received a 'Hans Brix' style sternly worded letter and ignored it.

[AndyWillie]

Some places transfer the merchant fee onto the consumer if a minimum sum is not met but some credit card companies in Singapore like POSB for instance state that no minimum spending is required for their everyday credit card so if the merchant tries to charge you, you can actually write a complaint.

[Vaucluse]

I've worked for a major credit card company

You bastard!

Ahem, having said that . . . vendors charge a higher percentage for Amex - Bastards!


(What is a minor credit card?)

[zzm9980]

(What is a minor credit card?)

Anyone that's not V or MC? jk. CUP (China UnionPay) is actually bigger than either V or MC, but that's thanks to government enforced monopoly.

Diner's is small, there are lots of others too that are just very geographically limited.

[Saint]

I've worked for a major credit card company

You bastard!

Ahem, having said that . . . vendors charge a higher percentage for Amex - Bastards!


(What is a minor credit card?)

And Amex charge the highest percentage to Merchant which is why they would far prefer to take V or MC.