Consumers' rights lost with a swipe

Consumers' rights lost with a swipe
PHOTO: Consumers' rights lost with a swipe

SINGAPORE - So VISA is playing hardball, and ComfortDelGro is saying - unofficially at least - that we don't need your cards.

Why should consumers care? Cash is still king when it comes to paying for cab rides, but the stand-off between Visa and the country's largest taxi operator is really part of a larger battle, one which could affect how Singaporeans pay for goods and services in the future.

Credit card surcharges, be they for cab rides, air tickets or jewellery, are fairly common here. The unfortunate thing is that most of us take it lying down.

An IT retailer once informed me that paying for a laptop by credit card would cost me 3 per cent more. I made a quick dash to an ATM to get cash, and felt that I had saved money by doing so.

In reality, I was being denied my rights.

Merchants know they are not allowed to levy a surcharge on credit card users, a condition clearly spelt out in the agreements they sign with banks.

But they also know they are untouchable. It is not illegal to impose a card surcharge, and banks - tasked to enforce the rule - are reluctant to get tough because it means less commission for them.

In their defence, merchants say that absorbing the commission will put an unfair squeeze on their razor-thin margins. Better to let customers pick up the tab, if they insist on paying by card.

Their arguments are valid, but why invest in card facilities like terminals if you are simply going to penalise customers for using them? Shouldn't credit card costs be considered business costs too?

In ComfortDelGro's case, Visa is going head to head with one of the biggest players, sending a clear warning to all other merchants. But consumers should not just stand aside and watch.

Their wallets are the best weapons against firms hiding behind terms like "administrative surcharges" and "convenience fees". If customers take their business elsewhere, retailers will be forced to rethink payment policies.

This has already happened in the United States, where merchants are legally allowed to impose a card surcharge in most states. Yet, major retailers like JC Penney and Wal-Mart vowed not to do so, fearing such fees would put them at a disadvantage.

That fear is missing in Singapore, where about 1.44 million people carried plastic last year, according to data compiled by Credit Bureau (Singapore). An HSBC survey also showed Singaporeans owned the most number of credit cards across the region, with an average of 3.3 cards per person.

So many cards, yet fewer and fewer places where they can be used without penalty.

Pity there is no obvious backlash from docile customers who, like me, simply cough up cash when it costs more to use plastic.

An attitude change is needed if card surcharges are to be swiped out. A win-win-win solution between banks, payment firms and retailers - none of whom wants to bear the extra cost or reduce profits - must also be found.

Failure to resolve this issue could undermine Singapore's drive to become a truly cashless society. And it would mean that cardholders, some of whom already pay annual fees to banks for the right to use cards, will remain victims of their own convenience.

tvoon@sph.com.sg

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