5/21/2013

SINGAPORE'S consumer watchdog, the Consumers Association of Singapore (CASE) is concerned about the coming Nets transaction fee hike, and said it would be lodging a complaint to the Competition Commission of Singapore (CCS) to seek redress in the issue.

Transaction fees, which are expected to go up by nearly four-fold on July 1, has not sat well with many businesses and consumers. With the higher levy to us Nets, the cashless payment system, a number of retailers say they may be forced to push prices up to cope.

It is the first time that Nets is raising its fees in 22 years.

The higher administrative fee, to be implemented over three months from July 1, is pegged between 1.5 and 1.8 per cent of purchases, a nearly four-fold increase which brings this levy close to credit card transaction fees.

Nets has explained that the fee hike was due to increasing competition from international card schemes and the increase is to maintain its viability.

An explanation that has not gone well with CASE. CASE said during a press conference on Monday that it found the explanation to be strange, and that it seemed more like an excuse, rather than a reason.

Mr Yeo Guat Kwang, President of CASE, said he is disappointed with the Nets' decision. He said Nets is a basic infrastructure in Singapore, with nearly 6 million card holders island-wide.

Eighty-three per cent of Singapore residents use the bank-issued Nets-linked cards for their purchases.

Mr Yeo said that 'tiding its fees towards market practice' is unacceptable. He also said that a sharp rise in Nets fees can also go against the government's drive towards a cashless society, as small retailers which have no other debit facilities may prefer to accept cash from consumers rather than Nets, after its fee increase.

While Nets will be rolling out a slew of incentives to help businesses cope with the fee hike in the short term, Mr Yeo says that he hopes Nets will reconsider or review its decision.

He fears in the long-run, the brunt of the cost will be on the consumer, as retailers may increase prices of goods and services.

Many consumers that straitstimes.com spoke to said they found the fee hike to be unreasonable. Some said that they would stop using Nets as a form of payment completely if prices of goods and services were to increase eventually.

Nets, or the Network for Electronic Transfers, is owned by DBS, OCBC and UOB. In January, it had announced that the levy will go up by between 0.75 to 2 percentage points.

Banks charge about two per cent for Visa transactions and around three per cent for American Express.(STI)

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