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Gadgets & Home Improvement

Cab firm and Visa in surcharge stand-off

COMMUTERS will no longer be able to use their Visa cards to pay for rides in ComfortDelGro's cabs by June, unless the taxi company's wrangle with Visa over card surcharges is resolved.
The Straits Times - March 15, 2013
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Cab firm and Visa in surcharge stand-off

Those who use credit and debit cards now pay 10 per cent extra, excluding goods and services tax.

This is a breach of contract terms, said Visa. After several meetings over the issue for the past three years, the payment company issued an ultimatum to Singapore's largest taxi operator on Feb 19: Stop the surcharge or we will pull out.

ComfortDelGro's group corporate communications officer Tammy Tan did not want to confirm the move, saying only that the company was "currently in discussions with the card-acquiring bank".

But Visa told The Straits Times that ComfortDelGro has refused to budge on the issue, and had informed them that it would stop accepting Visa cards in its cabs by May or early June.

Such surcharges are not a new problem, but this is the first time an industry player like Visa is taking such a firm stand.

Visa's country manager for Singapore and Brunei, Ms Ooi Huey Tyng, explained that her company wants to send a signal to all merchants who impose card surcharges. "They will know we mean business," she said.

Removing card surcharges will lower costs for consumers, Ms Ooi added, and encourage more people to go cashless.

Most taxi commuters here use cash to pay for their rides.

According to Visa, only 1 per cent of the total number of rides made in ComfortDelGro's 16,000 cabs are paid for using Visa cards.

Based on driver feedback, the National Taxi Association (NTA) believes that about 10 per cent of all transactions are made on debit and credit cards.

Visa said it will engage other cab operators on this issue soon. Companies like Premier Taxi, TransCab and SMRT also levy a 10 per cent fee on credit and debit card payments.

It is understood that they do so in order to cover costs, such as those for developing payment software and bank administration.

When contacted, other payment companies like American Express International (Amex) and MasterCard Worldwide did not want to say if they would follow Visa's lead.

Their cards can still be used for cab rides, along with Nets and ez-link cards, which attract an "administrative fee" of 30 cents per trip.

The Consumers Association of Singapore had been against card surcharges for years, though its executive director, Mr Seah Seng Choon, wondered if commuters will be on the losing end this time.

"It's a good thing," he said of Visa's move. "But ComfortDelGro's reaction just means consumers will be inconvenienced and cannot pay with their Visa cards."

Mr Seah also urged ComfortDelGro to explain why it had imposed such a hefty surcharge in the first place.

A check with merchants found that they typically pay banks a fee of about 3 per cent to 5 per cent per transaction.

Amex's vice-president and general manager of merchant services for Singapore and Thailand, Mr Kevin Alcott, said businesses that impose surcharges "are only hurting themselves".

"People tend to stay away from places that try to impose these checkout fees," he added.

Mr Chan Chin Hee, a regular taxi commuter, who uses his credit card to pay for one out of every five rides, is dismayed by Visa's pullout.

"This is so inconvenient. Paying by credit card also gives me points," said Mr Chan, 48, who is self-employed and does not own a Nets card. "Now I have to make sure I always have cash with me."

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