Comparing surcharges for different modes of e-payment

In a digital world where transactions can be readily inspected by consumers, it has become very easy to compare the different surcharges that are being applied on one’s purchases. While surcharges via e-payment modes typically comprise of a small percentage of the total transaction, they can potentially add up to a significant amount over time. Generally speaking, e-payment modes can be divided into two broad categories – use of credit cards and QR code payments, such as Grabpay or NETS QR.

Recently, Singapore Airlines (SIA) made the decision to introduce a credit card service fee of 1.3 percent of the total amount, capped at S$50 for its Economy Lite flights. This prompted a public outcry, which led to SIA making a decision to ditch its plans to levy the service fee just one day after its announcement. While SIA has remained tight-lipped on the reason behind the policy u-turn, it is clear that applying an additional surcharge on credit card payments would be antithetical to PM Lee’s push for Singapore to become a cashless society.

When it comes to credit card payments, Visa and Mastercard prohibit their merchants to pass on the fees to their customers. However, the business costs of adopting credit card systems will inevitably be reflected in the final price that customers pay. Take another example of taxi fares, which arguably affects the average consumer on a daily basis, more so than airplane flights. VISA and local cab company Comfort Delgro have been embroiled in a longstanding dispute over the latter’s decision to apply a 10 per cent surcharge. This culminated in Comfort deciding to pull the plug on VISA payments in 2013 before deciding to reinstate it again in 2016.

With VISA and Comfort in an uneasy stalemate, it is helpful to understand Comfort’s interaction with another payment provider. In July 2017, Comfort introduced Alipay’s QR code as an additional payment option on its fleet of 15,000 taxis. Unlike VISA payments where surcharges are applied, the administrative fee for using Alipay was waived from September till end of last year. Furthermore, commuters using the Alipay e-wallet application could qualify for further discounts every month.

While it is definitely premature to announce the victory of QR codes over credit card payments, it does appear that surcharges for QR code based payments appear to be less onerous on merchants and their customers. Given the predominance of credit card companies like VISA and Mastercard in Singapore, it would certainly be interesting to see how this rivalry plays out in the future.

About FOMO Pay

FOMO Pay provides one-stop QRCode Payment Solution which enables merchants to accept a full suite of new payment methods including WeChat Pay, NETSPay, mVISA, Grab Pay, Baidu Wallet, Best Pay, etc. Launched in 2016 with more than 1000 merchants acquired within a year, FOMO Pay is trusted by major companies including SPH, Marina Bay Sands, StarHub, JUMBO, Club 21, CHANEL, etc. With FOMO Pay, merchants can unlock true business potential by giving customers the payment options they prefer and adopt cashless payment easily. FOMO Pay is also sitting in MAS SGQR Taskforce to promote QR code payment and make Singapore a cashless society.