MRCA: Retailers unaware of payment card’s framework

Association hopes BNM will protect merchants from high MDR offer by banks


Many retailers claimed that they are not aware of the Payment Card Reform Framework, an initiative that has been implemented in stages by Bank Negara Malaysia (BNM) since Jan 15, 2015.

Malaysia Retail Chain Association (MRCA) deputy president Valerie Choo said the framework only came to light to most of the retailers when BNM announced last week that they are not permitted to impose surcharges for payments using debit cards, along with a similar prohibition for credit card transactions under the rules of international card schemes — both part of the framework.

“Many retailers are not aware of the framework. Hence, MRCA urges BNM to conduct more engagements with retail associations, or educate retailers on the objective of promoting cashless transaction and the different costs of accepting different payment cards, as well as empower merchants to encourage consumers to use lower-cost payment cards, such as debit cards.

“We also hope BNM will protect merchants from the high merchant discount rate (MDR) or indiscriminate MDR increase by banks, especially to smaller retailers,” Choo told The Malaysian Reserve (TMR).

As it is, she said smaller-sized retailers are not keen to accept payment cards if the cost is higher and less affordable for them.

Choo, who is also Simply Awesome Sdn Bhd MD, admitted that certain retailers, especially those with low profit margins, do impose surcharges.

She said a majority of retailers, on the other hand, would absorb the transaction fees imposed by banks.

BNM said the prohibition on surcharges is monitored and enforced by banks that provide e-payment facilities to merchants (acquiring banks).

It added that one of the reasons retailers impose such a surcharge is to recover from the cost incurred during each card payment.

Prior to the BNM’s ruling, retailers would typically be charged a transaction fee, also known as the MDR, which in general is higher for credit cards than debit cards.

Choo hopes BNM will ensure that banks charge a fair MDR on all types of payment cards to enable a platform for greater transparency.

MRCA VP Datuk Liew Bin (picture) said the surcharge issue has been going on for quite some time.

“Only retailers that do not have very good margins will impose the surcharges on card payments.

“For me, it is good that BNM comes up with the statement as I don’t see the need to impose surcharges on card payments, as retailers will get back the money in three days from the banks,” Liew told TMR.

Liew, who is Bagman Corp Sdn Bhd CEO, added that BNM might have introduced such a measure to encourage the use of e-wallets and mobile payments.

He said the transaction fees for e-wallet services are lesser than the MDR on debit and credit cards.

Choo added that MDR for American Express card is the highest.

BNM also said in the statement that retailers are encouraged to accept the more cost-effective payment methods, including debit cards and mobile payments (instant fund transfers), and benefit from the lower operational cost.

The central bank added that retailers, who cannot afford to pay the higher MDR for credit card, are encouraged to liaise with their respective acquiring bank to accept only debit card payments.