Most Malaysian Retailer Breaking Credit Card Guideline

Retailers are not permitted to impose surcharges for payments using debit cards and a similar prohibition is applied for credit card payments under the rules of international card schemes such as Visa and Mastercard under the Payment Card Reform Framework, said Bank Negara Malaysia (BNM).

It said the response provided by the Deputy Finance Minister in the Dewan Rakyat  was with reference to the interest imposed by credit card issuers on cardholders for outstanding credit card balances that were overdue and not on surcharges imposed by retailers on credit and debit card transactions.

BNM said this in a statement today in response to Free Malaysia Today's article dated March 19, 2018, entitled ‘Consumer body: Abolish surcharges on credit cards'. It said the prohibition on surcharges was monitored and enforced by the banks that provided e-payment facilities to merchants (acquiring banks).

"Consumers who encounter merchants that impose surcharges are advised to lodge a complaint with their respective banks or payment card issuers," it said.

BNM said one of the reasons retailers imposed a surcharge was to recover the cost incurred by them when accepting card payments whereby they were typically charged a transaction fee, also known as the merchant discount rate (MDR). 

In general, the central bank said, the MDR for credit card was higher than the MDR for debit card.

Globally, it said, countries had adopted different approaches in dealing with the issue of surcharges  imposed by retailers for card payments.

In the European Union and the United Kingdom, retailers were prohibited from imposing a surcharge on consumers for credit and debit card transactions while in Australia, retailers had the right to impose surcharge on customers who paid using the more expensive payment cards such as the credit card, it said.

The rationale of such an approach was to send the correct price signal to encourage consumers to pay using the more cost-effective debit card, it said.

In Malaysia, BNM has introduced measures such as the Payment Card Reform Framework and the Interoperable Credit Transfer Framework to lower the cost to retailers when accepting cost-effective electronic payment methods.

It said this would in turn lessen the pressure for retailers to impose surcharge on customers.

To benefit from lower operational cost, retailers were also encouraged to accept the more cost- effective payment methods, such as  debit cards and mobile payments (instant fund transfers), it said.

BNM said retailers who could not afford to pay the higher MDR for credit card were encouraged to liaise with their respective acquiring bank to accept only debit card payments.