No plans to ban surcharges for credit card use, says govt

There is no need to emulate the UK and abolish additional surcharges, according to deputy minister


The government has no plans to ban surcharges imposed on debit and credit card transactions, despite the move to outlaw such fees which has been implemented in the UK to safeguard consumers.

Deputy Finance Minister Datuk Othman Aziz said there is no need to emulate the UK and abolish the additional surcharges due to the difference in economic status.

Othman was responding to a query from Kuala Pilah MP Datuk Seri Hasan Malek, who asked if the government has any joint programme with the central bank and local banking industry to abolish the surcharges imposed by retailers for payments made with debit and credit cards.

In the UK, it is illegal for businesses to add surcharges for card payments. The move was to end what is deemed as unfair business practice on consumers.

“Moreover, reduction or abolishment of interest charges on credit cards as implemented in the UK will not necessarily benefit the country’s economy.

“Instead, it will promote a habit of non-prudence and indiscipline among credit card holders,” Othman said.

He said the central bank has taken preventive measures since 2006 to avoid credit card borrowers from being in debt for a long-term.

The central bank has also increased the eligibility for users to be given credit facilities and increasing the minimum annual salary from RM18,000 to RM24,000 for credit cards.

Othman said the government has taken the initiative to enact a consumer credit law to govern credit supply and protect consumers.

Meanwhile, he said the number of Malaysians declared bankrupt due to credit card usage is still relatively low — with only 1,598, or 0.04% users, declared bankrupt due to credit card usage as of end 2017.

“The number is still under control and many preventive measures have been taken to ensure those given credit cards have the ability to repay back.

“As for those who are having problems in paying their credit card balance, we will help them through agencies such as the Credit Counselling and Debt Management Agency (AKPK),” he said.

A total of 158,116 credit card users had sought AKPK’s help via its debt management programme up to January 2018, involving debts totalling RM6.5 billion.

He said until December, a total of 9.9 million credit cards were issued, involving 8.8 million main cards and 1.1 million supplementary cards.

“The number of main credit card holders is 3.7 million,” he added.

Meanwhile, Deputy Minister in the Prime Minister’s Department Datuk Razali Ibrahim told the Dewan Rakyat that there are more than 300,958 bankrupt Malaysians, despite the amendments to the insolvency law.

He said of the total 300,958 individuals who have fallen into bankruptcy, more than 60% are between the ages of 35 and 54.

“We are trying to reduce this number. It is a lot of effort and work,” he said when responding to Ipoh Barat MP M Kulasegaran’s question on efforts to reduce bankrupts in the country.

Razali said the initiatives taken by the government were aimed to make it more difficult for anyone to be declared bankrupt.

He said the public should also not be afraid of the Insolvency Department or AKPK.

He noted that amendments to the law would make people more responsible in managing their finance.

“Financial institutions can also be more responsible in approving their loans,” he said, adding that the public should be more open-minded towards the Insolvency Department.

“Usually, we want to let them go or discharge them from bankruptcy, but the loaners will object. So, we try to mediate the situation with the financial institutions,” he said.

Razali said there are 100,610 people declared bankrupt, but about 14% from the total — that is 14,108 people — have been discharged in the same period of time.

Selangor recorded the highest discharge of bankrupts with 4,189 people, followed by Johor with 2,278 people.

The Federal Territory and Penang recorded 1,665 and 1,002 people discharged respectively. Other states included Sarawak (961), Perak (895), Sabah (737), Kedah (550), Pahang (468), Negri Sembilan (423), Kelantan (342), Melaka (291), Terengganu (253) and Perlis (54).