Stores Adding 3% To The Bill?

[penzman]

What's the deal with that?

It's happened to us a few times, once when buying ceramic tiles. We'd been shopping all day and finally found what we were looking for, needless to say that I wasn't going to spend another day trying to find the same or similar product again so we paid the extra 3%.

Is this legal or not?

[Tywais]

What's the deal with that?

It's happened to us a few times, once when buying ceramic tiles. We'd been shopping all day and finally found what we were looking for, needless to say that I wasn't going to spend another day trying to find the same or similar product again so we paid the extra 3%.

Is this legal or not?

Quite common here and is legal. They are adding the charge their credit card merchant agent charges them for handing the card rather then absorbing it as some places will.

[chuchok]

If you complain to your CC company, they "should" deduct this 3% and then take it from the vendor.This is what I have been told, but have no personal experience.

[naka]

If you complain to your CC company, they "should" deduct this 3% and then take it from the vendor.This is what I have been told, but have no personal experience.

Not a chance in Thailand, they have been doing this for ever, only the bigger hotels

do not make this charge. By the way, they charge 5% on Amex or Diners.

Naka.

[GuestHouse]

It is not illegal - Provided they are charging all card users in the same manner.

A couple of years back I called Amex and Master Card, the both gave me the exact same asnwer.

[chuchok]

From http://en.wikipedia.org/wiki/Credit_card

Credit card companies do not want merchants to charge credit card users more than they charge other customers, even though the merchant pays a fee of 2 to 3 percent (merchants negotiate an exact percentage with their banks) to process credit payments. In some countries this fee may be significantly more. If customers were responsible for this fee, it would often discourage credit card usage.

In many places, governments have passed laws (at the urging of the credit card industry) to make this illegal. Despite this, some retailing sectors flout this regulation, especially in areas of very competitive, commodity products such as personal computers, where the fine print of an advertisement states "prices already cash discounted -- surcharge for credit card". Other retailers offer incentives or bonus coupons for using cash, such as Canadian Tire Money.

Some critics have observed that this results in what is effectively a hidden tax on all transactions conducted by merchants who accept credit cards since they must build the cost of transaction fees into their overall business expense. The end result is that cash consumers are essentially subsidizing credit card holder purchases. The cost of the convenience enjoyed by card holders and the profits taken from transaction fees by the card industry (which has come to rely increasingly on this revenue stream over the years) is partially offloaded onto the backs of the cash consumer. Critics go on to say that further compounding the issue is the fact that the consumers most likely to pay in cash are the least able to afford the additional expense (card holders are more likely to be affluent, non-card holders less so). Australia is currently acting to reduce this by allowing merchants to apply surcharges for credit card users. In the United Kingdom, merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method, but few merchants do so (the most notable exceptions being budget airlines and travel agents).

[sbk]

If your card is US based then you can contact your CC company with the proof and ask that it be removed from your charges. I did it about 6-7 years ago, and it did work.

[Upcountry]

No only will merchants charge you 3%, but your credit card company may do so also for transactions conducted in a foreign currency.

This started happening to me here in Thailand when I used my American credit cards for purchases. So I stopped.

If you have a Thai bank debit VISA or the like, the local merchant will usually accept it and not charge you 3%. He may point you to the nearest ATM as well.

[britmaveric]

Only seen it done with small merchants - doesnt happen from my experience in restaurants, major stores, airport, hotels, ect. Very annoying to say the least, but either that or use dosh strictly.

[Tywais]

Only seen it done with small merchants - doesnt happen from my experience in restaurants, major stores, airport, hotels, ect. Very annoying to say the least, but either that or use dosh strictly.

The big ones will have their own merchant account to handle CC processing directly and the overhead costs are less then 1% so they can afford to absorb that. The small places will not open up their own merchant account (expensive startup and fees) but use a merchant agent were the normal charge is 3% per transaction and as such would cut into their profit margins considerably.

Had to go through all this stuff when I started up my on-line business and it is a headache.

[Axel]

Everything over and above Baht 400 I pay by credit card. Rarely, somebody (with the sign to accept the card) wants to add a percentage.

Exceptions are places in BKK like Soi Cowboy or P/Pong who just do not accept cards in general and if you want to use, they ask some other shop to where they have to pay.

Another story, travel agents. They always claim having to add the percentage to the ticket price. So I switched to American Express Travel office, using their card. Same, sometimes lower rates, and they do, of course, accept their own card.

Roughly, you can calculate for ever Baht 25 spent by card, you will get 1 km free flight by an airline-program.

Another way, negoatiate where you have to. When the price is close to acceptable, offer to pay by card or get discount of another 3% for cash-payment.

[Rinrada]

Under investigation but probably another sop story...

MasterCard Investigation By OFT

Criticisms have been levelled at the credit card market recently by the office of fair trading for the charges applied to their customers and an investigation is currently taking place.

However the results of another investigation by the OFT into the credit card industry has been revealed by the OFT this week with MasterCard accused of handling fees that overcharge and stifle competition between March 2000 and November 2004.

The fees in question are those paid by businesses when they accept a credit card transaction to the credit card company, otherwise known as handling fees or interchange fees. Currently a collective of MasterCard credit card companies sets these fees at a standard rate.

It’s this standard fee of 1% that causes concern over competition; it negates the ability of some companies to provide lower fees for the use of their product.

The accusation of stifling competition is a serious one, especially as the OFT believe MasterCard have broken European competition regulation and have passed their findings onto the European Commission.

The fees are bad news for consumers, as it raises concerns that business raise prices to cover their costs that affect everyone, not only credit card customers. Additionally the OFT say that the fees cover not only the cost of conducting the payment, but also other things such as interest free periods. Clearly this is not what the fees are meant to pay for and it seems disingenuous to recoup these costs in handling fees.

MasterCard have defended their business practices by arguing that the credit card system has allowed for competition and a number of new credit card companies have entered the market under this system.

They also argue that if fees were lowered, credit card companies would make up the difference by raising interest rates or abolishing customer benefits such as loyalty schemes. While a great many of us enjoy low rates and bonuses from our credit card companies, surely we would rather the companies we patronised were honest when they charged us.

If we have to pay higher rates we know that when we enter an agreement, rather than surreptitious charges that push prices up and we are largely kept unaware of.

Presently it hasn’t been revealed whether MasterCard will face fines over their business practices. It is known that Visa are also being investigated over interchange fees and with other investigations into fees charged to customers it seems like there may well be more transparency on charging for consumers in the future.

Regardless of whether the threatened costs of credit cards increases as a result of rulings like these, the consumer will surely be better off knowing what their being charged and how much it will cost.

So far consumer groups seem to agree with the OFT, both the National Consumer Council and British Retail Consortium have lent their support to the OFT’s findings.

[penzman]

I ll try to negociate the price of the goods next time then.

Thanks all for your coments.

[Khun Ngo]

Why not just pay cash? There are ATM's almost evrywhere in BKK.

I have never understood why to involve a third party unnessescerily

and cause higher expenses for yourself or for the vendor.

[Gary A]

Anyone who uses a credit card here has more nerve than I have. I know a number of people who have had VERY large purchases put on their cards. The credit card company eventually took the charges off but it was a lot of hassle. Cash rules and with the large number of ATM's I also see no reason to use a credit card.

[simcity]

last time i use my amex at a hotel i got 25 % off my bill for food ! lol

my australian visa charge me 3% for transaction ATM or purchase !

[PeaceBlondie]

I've only ever had travel agencies add it on.

The weird part is that MBNA, a big credit card outfit in the USA, charges me 3% for cash withdrawals, even when I've got a positive balance of my own money in the account!

And this post makes the first time this American only ever wrote, "...only ever."

[penzman]

Why not just pay cash? There are ATM's almost evrywhere in BKK.

I have never understood why to involve a third party unnessescerily

and cause higher expenses for yourself or for the vendor.

I'd have to ask my wife the accountant, sleeping right now.