Parkway Parade shop made customers pay extra although practice is disallowed.

Jun 06, 2007
AsiaOne

Even before the Nets fee hike kicks in, a shoe shop in Parkway Parade has already started charging customers extra to cover the increase.

The shop, Dynasty Shoes, has been charging customers who pay by Nets an extra 1.7 per cent on purchases since April 1, The Straits Times reported today.

Both Case and Nets have criticised the merchant's move.

The fee hike, to be implemented in three stages from July 1, will see merchants paying transaction fees of up to 1.9 per cent of purchases, up from the current 0.35 per cent to 0.55 per cent.

Mr Ivan Ong, vice-president of Nets Payment and Value-added Services, explained that the fee increase was needed to help Nets face increasing competition from international card schemes, adding that Nets transaction fees are still the lowest in the market.

Mr Ong also said that retailers are not allowed to pass on the administrative fee to consumers.

When The Straits Times asked about the extra charge, a shop assistant, who identified herself as Nelly, said customers can opt to pay cash and avoid paying the fee.

She then produced a letter from Nets dated last December stating that Nets will be levying a transaction fee of 1.7 per cent of purchases from the shop.

The letter indicated the hike will start on April 1. It did not say that consumers will have to bear the increase. Nets later changed the implementation date to July 1.

Mr Patrick B.W., who runs Dynasty Shoes, claimed he did not receive a second letter from Nets that the implementation had been delayed. He also said he did not get a reply to a letter he sent to Nets informing it that he will pass on the charge to consumers if the hike is carried out.

He said: "We never agreed not to pass the fee to consumers."

The Nets fee hike has angered many Singaporeans, who say it is regressive and is a return to the "dollars and coins" days for shoppers who have embraced cashless payment. They also fear that it will drive small-scale retailers to push their prices up to cope with the increase, and this will affect consumers, about 83 per cent of whom use Nets to pay for their purchases.

A number of AsiaOne readers, in their postings on the portal's forum, say they will stop using the Nets card and pay cash instead.

Nets is owned by a consortium of local banks DBS, UOB and OCBC, and is a popular cashless payment system with six million users.

About 13,000 retailers, including many small-scale merchants, are on it.

Many of them depend on Nets as they cannot afford the fees levied by credit card issuers.

The Straits Times quoted Case's vice-president, Mr Lim Biow Chuan on the Parkway Parade shop's practice, saying: “Such business conduct is unacceptable.”

Case had also criticised Nets earlier, saying its move to raise fees is a “monopolistic practice”.

Nets chief executive officer Poh Mui Hoon said consumers should call the Nets hotline on 6274-1212 to report any errant merchant.

Ms Poh also responded to Case's criticism. She said: “This is not a consumer issue since merchants are not allowed to pass on the charges to consumers.”

She insisted that Nets has “no choice” but to increase fees to ensure that banks will continue to issue Nets-linked cards in the face of competition from bank-issued debit cards, which number about 600,000 in Singapore.

Case filed a complaint with the Competition Commission of Singapore (CCS) against Nets yesterday.

A CCS spokesman said a fine not exceeding 10 per cent of the business turnover may be imposed for up to three years if CCS “deems an infringement was committed”.

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