By Chan Quan Min
Debit cards are set to become a more popular form of payment at more retailers once new rules that regulate the fees card issuers can charge and the influence they exert on merchants come into effect, experts say.
The new rules under the Payment Card Reform Framework released by Bank Negara yesterday put a ceiling on interchange fees charged by card issuers to merchants.
They also force card issuers to be transparent in their transaction fees and require that domestic debit card transactions be priced separately from more expensive international debit card transactions and credit card transactions.
The new framework, to take full effect from July 2015, will lead to “greater card acceptance especially among small merchants,” said researchers at TA Securities.
They add that the framework would also encourage greater use of debit and prepaid cards “due to their more efficient cost structure.”
From July interchange fees for domestic debit card transactions will be subject to a ceiling of 0.15% of the value of the transaction or 50 sen plus 0.01% of the value of the transaction, whichever is lower.
This is far less than the ceiling set for international debit card transactions and credit card transactions.
The ceiling charge for credit card transactions is 1.1% of the value of the transaction, many times more than that of domestic card transactions and even more so for transactions above RM400.
Interchange fees are one component of fees charged by card issuer to merchants. The merchant fee or merchant discount rate includes processing and other fees in addition to interchange fees.
Merchants and consumers get to choose
The new rules by Bank Negara are not all about regulating interchange fees, they also aim to take away the influence card issuers and payment card network operators have on merchants.
Bank Negara’s reform framework calls for “empowering merchants to steer cardholders to use cost-effective payment cards and to have the first priority in routing decisions.”
This means merchants cannot be made to favour one payment card network over another, in effect leaving the choice to the consumer.
The new regulations come as the number of point-of-sale terminals to handle debit and credit payment cards look set to grow to 280,000 next year in 2015 and to over 430,000 in 2017.
The number of debit card transactions processed in Malaysia next year is estimated at 89 million and is set to grow to 246 million by 2017
You must be logged in to post a comment.