PETALING JAYA, Aug 13 — Consumer groups have cried foul at the likelihood of debit card swipe fees being passed on to the public by retailers here, following a federal court decision in America last week.
Federation of Malaysian Consumers Associations (Fomca) president Datuk N. Marimuthu yesterday said the body would monitor the issue and look for a win-win situation.
“Fomca will look into the matter and, if necessary, take action through the National Consumer Complaints Centre.”
He said debit cards were used by consumers as a means to avoid carrying large amounts of cash when making purchases as, with cash, they could fall victims to robbers.
“This benefits merchants too because the customer won’t have to come back another day to pay. During that time, they may change their minds about buying.”
As such, he advised merchants not to pass along swipe fees to consumers and for the public to be mindful of what it was they were paying for.
“Merchants must absorb any such fees or people will not buy from them. If you (the consumers) make a purchase, keep your receipts so you know what they (merchants) are charging you.”
Malaysian Muslim Consumers Association chief activist Datuk Nadzim Johan said the court decision in America should not affect transactions here as it had no jurisdiction.
He noted the difference between debit card swipe fees and credit card fees: “When you use a debit card, you have money in the bank already. This is your money and a debit card is almost like a cash transaction while using a credit card is a debt.”
Nadzim also said deals between merchants and banks were up to the two parties and should not affect the public. “They cannot burden consumers, who have so many burdens already.”
He advised consumers who had been charged swipe fees to report such cases to the authorities, saying that banks are already making money off depositors.
“It (charging consumers a swipe fee) is highway robbery. It would be better to carry cash while banks should be too happy to hold on to your money.”
The Malay Mail frontpaged a report yesterday on the matter, speculating it could result in the fees being passed on to consumers.
Banks can’t rein in merchants
The US court ruling on debit card and transaction fees, which could allow merchants to pass on such charges to consumers, may not be a widespread practice yet in Malaysia — but it effectively removes the last bastion banks have to rein in merchants on such charges.
A banking source said the current agreements between banks and debit card platform operators — like Visa and Mastercard — require banks to actively ensure merchants don’t pass on the swipe fee to consumers.
In most cases, banks can withhold payments to merchants if consumer complains about being charged the swipe fee — and it is a deterrent that has had mixed results in the past with related transactions via credit cards.
The swipe fee for debit and credit cards are similar — ranging from 1.5 to 2.5 per cent of the total purchase — and depends on the total value of transactions handled by the merchant on an annual basis.
Several banks contacted yesterday said they have yet to be notified by the debit card platform operators on the impact of the US court decision.
But chances are, said the banking source, local banks may now hesitate to rein in merchants who pass on the swipe fee to consumers unless Bank Negara Malaysia issues a directive on the matter.
