By Chan YM

Although I do not own or manage a business, I do not agree with the views expressed by some consumers or consumer associations regarding the surcharge for payments made by credit card.

If Bank Negara is adamant that the merchant discount rate (MDR) should not be borne by credit card users, then the regulator should get rid of the MDR altogether.

If credit card issuers are allowed to continue charging the MDR, consumers will end up paying for it. Only the naïve would think they are not, without realising that the cost will be factored in.

Establishments that readily accept credit cards have already included the surcharge for credit cards in the pricing. It is just a ploy to attract customers and make them feel welcome.

But to encourage business transparency, establishments should be given the option to add a surcharge separately, just as for the goods and services tax (GST).

This will help businesses operate more competitively on lower margins. Currently, cashiers are still required to deal with customers gingerly when explaining the need to impose a surcharge for credit card payments.

This is especially so for large ticket items costing several thousand ringgit – overseas tour packages for a family can amount to tens of thousands of ringgit. Absorbing a 2% MDR may wipe out most or all profits.

If Bank Negara cannot abolish the MDR, it should place a cap on large ticket items, such as by imposing a flat rate for payments over RM1,000. This will spur the growth of cashless payments using credit cards, such as when paying deposits for new cars.

The vast majority of consumers who pay for expensive items by cash, cheque or online methods are benefitting from establishments that impose a surcharge on the few customers who insist on using credit cards.

Consumers and consumer associations that want Bank Negara to strictly enforce the regulation against surcharges are only driving up prices when all businesses are forced to comply on a technicality.

We are all too aware of how a few percent, all-round increase in prices on goods and services have spiked inflation in this country. Strict enforcement by Bank Negara would trigger another round.

Is this the wish of some consumers and consumer associations?

Chan YM is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.