Why merchants surcharge Credit cards and refuse International Cards

[dannywla]

Today I am in the process of buying a new vehicle. All cash deal as I am retired. I purchased the vehicle and wanted to pay 90% draft check and 10% on my Visa.

Toyota sales men said cannot accept my Chase Saphirre card only domestic card. Plus I must pay him 3% transaction charge cash. I explained to him It's a VISA and being a merchant he must accept my card as every hotel, department store, Hospital and airline does in Thailand.

Having to wait on his boss approval Inhad just paid my insurance broker with that card 27k baht payable to MSIG with no reistance from the agent and no service charge.

I as a Merchant can loose the privilege if I surcharge and make up my own policy. If the transaction clears its legitimate. Central and Lotus do not surcharge or refuse my cards.

I tried to explain to the car salesman that if he accept VISA he must accept mine. I know it's illegal worldwide as a Merchant to Surcharge the customer has anyone had those charges waived ?

Curious where in Thailand they do not surcharge you as its illegal in the USA.

[Satcommlee]

The 3% is common policy and he probably didn't accept an international card because if you were not satisfied with the purchase you could lodge a claim through your credit card provider.

A credit card is not legal tender just a convenient way to pay, and there is no automatic right that this card should be accepted by anyone.

[Koosdedooes]

I use a citibank credit card issued in Singapore frequently and never had it refused by merchant, i also have a SCB cc and on ocassion had merchants trying it on with the 3% and i just declined their business, in fact it cost one Apple store the purchase of an Ipad on one ocassion, and i bought from another shop who had no problems accepting my cc,s

[samsensam]

It's a VISA and being a merchant he must accept my card as every hotel, department store, Hospital and airline does in Thailand.

he doesnt have to accept your card, though refusing it is a peculiar and potentially unprofitable way to do business.

the credit card company levies a fee on the merchant, most merchants absorb this fee and take it into account when pricing goods. some merchants, usually small businesses e.g. travel agents, make the purchaser pay the fee. a normal way to do business.

[dannywla]

I accept VISA, MC and AMEX as a merchant in USA. As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter.

Curious to know what Merchants TV members can charge without being hit with the transaction charge?

[marcusd]

I use a citibank credit card issued in Singapore frequently and never had it refused by merchant, i also have a SCB cc and on ocassion had merchants trying it on with the 3% and i just declined their business, in fact it cost one Apple store the purchase of an Ipad on one ocassion, and i bought from another shop who had no problems accepting my cc,s

The surcharge is not a complsory nor is it a thing you can refuse.

I am an australian merchant and we can lawfully pass on charges. Albeit in Oz it is .3% not 3%

[tolsti]

I accept VISA, MC and AMEX as a merchant in USA. As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter.

Curious to know what Merchants TV members can charge without being hit with the transaction charge?

Why is America constantly quoted as a reference point? Different situations apply in different countries.

[tolsti]

I use a citibank credit card issued in Singapore frequently and never had it refused by merchant, i also have a SCB cc and on ocassion had merchants trying it on with the 3% and i just declined their business, in fact it cost one Apple store the purchase of an Ipad on one ocassion, and i bought from another shop who had no problems accepting my cc,s

The surcharge is not a complsory nor is it a thing you can refuse.

I am an australian merchant and we can lawfully pass on charges. Albeit in Oz it is .3% not 3%

Exactly... And here the charge is 3%.... For a small trader that's a lot of money.

[samsensam]

I accept VISA, MC and AMEX as a merchant in USA. As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter.

Curious to know what Merchants TV members can charge without being hit with the transaction charge?

as the OP is attempting to make a purchase in thailand not america how is this relevant?

[Suradit69]

I accept VISA, MC and AMEX as a merchant in USA. As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter.

Curious to know what Merchants TV members can charge without being hit with the transaction charge?

"As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter. "

I doubt it's illegal. A merchant can just quietly add a percentage to the price of whatever is being sold and then give a discount for someone paying cash if s/he wanted to. The credit card companies may not like it if you refuse their cards, but that's hardly a matter of legality.

If I use my US credit cards for non-dollar charges the credit card provider charges me a foreign currency service percentage on the total charge.

"they can and would revoke my privilege to accept any card thereafter"

Not sure who "they" is. Since you claim it's illegal, do you mean the government is going to prevent you from accepting credit cards? I think you're blowing smoke.

Edited May 4, 2016 by Suradit69

[DogNo1]

If it were me, I would get a cash advance on the Visa at a Bangkok Bank and hand over the 10% in cash. Bangkok Bank will not charge you anything for an over-the-counter withdrawal. I have a lot of Chase cards including the Sapphire and the United Mileage Plus. I never use them because the Navy Fed and USAA Visa cards are better with no foreign transaction fees and they give the Visa rate of the day. I think that Chase is changing one of its cards to a no-foreign-transaction card. You could try checking on the Chase website. I did pay for a pair of glasses at an optical shop a few months ago where they calculated the exchange rate about 1.5 baht lower than the actual Visa rate for the day. Now I pay in cash at unfamiliar places where they can't tell me what the exchange rate will be. I have also had shops in MBK give me a low exchange rate AND charge me 3%. You have to be careful. I know that Central stores and Bumrungrad will give me the proper exchange rate with no added fees. If your purchase is small, the 1.5 baht lower exchange rate doesn't hurt too much but when you get into large sums of money, it really does!

[JimGant]

"Sir, the price for that widget is $103 -- but if you pay cash, I can give you a discount that will lower the price to $100. No, of course there's no surcharge for using a credit card. Just a discount for paying cash."

But, hey, it's no longer illegal to charge a "convenience fee" for using a credit card in the US (with some apparent individual state exceptions).

As a result of long-standing litigation against the cards brands, merchants are now permitted to charge customers a surcharge for paying with a credit card. Ten states still prohibit surcharging, and surcharges are still not allowed on signature and pin debit transactions. - See more at: https://www.cardfellow.com/charging-customers-a-credit-card-convenience-fee-at-check-out/#sthash.6qjs5T2b.dpuf

Also, Visa's guidance to merchants:

https://usa.visa.com/support/small-business/regulations-fees.html#2

[gandalf12]

I had a similar experience when buys phones for my daughters. I have MasterCard and they didn't want to accept it despite having a MasterCard agreement. I had a long discussion with the manager who seemed to think I may not pay him and explained MasterCard pay you, any argument is between me and MasterCard. Eventually they accepted the card and was paid in accordance with MasterCard payment procedure.

It would appear they have no real knowledge of International payment schemes. Unfortunately they all charge a surcharge when using them outside of the issuing country

[TPUBON]

When I started a restaurant business in the U,S.I talked Visa/MasterCard about an account. In the agreement was a statement that said I was not allowed to charge customers a fee for using a card plus I had to except the card no matter what the amount of the charge was. This may be a U,S, thing and does not apply in other countries. The penalty was loss of the right to accept cards. Very devastating for a business.

[Koosdedooes]

When I started a restaurant business in the U,S.I talked Visa/MasterCard about an account. In the agreement was a statement that said I was not allowed to charge customers a fee for using a card plus I had to except the card no matter what the amount of the charge was. This may be a U,S, thing and does not apply in other countries. The penalty was loss of the right to accept cards. Very devastating for a business.

And per post no 12, this is no longer valid in the vast majority of the states in US and one is permitted to charge a fee

Therefore your post doesnt relate to Thailand, and the info you have posted about the US is incorrect

[kennalder]

In the 80's I had a couple of stereo stores in the US. We would not take American Express as they charged us 10%. Visa at the time was 3%. At one time we passed the fee on to card holders, but as cc volume picked up two things happened. 1. We initially rolled the fee into our pricing (unfair really to those not using cc's) and 2. Visa lowered fees and it became much less of an issue. The same will eventually happen here.

[mihalis]

some do so in Oz too.....

[paulbj2]

"Sir, the price for that widget is $103 -- but if you pay cash, I can give you a discount that will lower the price to $100. No, of course there's no surcharge for using a credit card. Just a discount for paying cash."

But, hey, it's no longer illegal to charge a "convenience fee" for using a credit card in the US (with some apparent individual state exceptions).

As a result of long-standing litigation against the cards brands, merchants are now permitted to charge customers a surcharge for paying with a credit card. Ten states still prohibit surcharging, and surcharges are still not allowed on signature and pin debit transactions. - See more at: https://www.cardfellow.com/charging-customers-a-credit-card-convenience-fee-at-check-out/#sthash.6qjs5T2b.dpuf

Also, Visa's guidance to merchants:

https://usa.visa.com/support/small-business/regulations-fees.ht

Credit card regulations that apply in the USA, apply in the USA and not necessarily anywhere else in the world, that much should be blindingly obvious.

Many countries have no problem with retailers clawing back from the customer, the exorbitant sums that credit card companies demand by way of a discount from merchants. Indeed, some folk regard the credit card issuers as licensed bandits; not an unreasonable viewpoint when you consider that many credit card issuers are still charging around 20% or more in interest on balances whilst the bank rate is at an all time low in most countries (and indeed in some countries is even in the unthinkable negative territory).

[CharlieH]

nonsense post removed

[CharlieH]

The majority of Thai staff are told "a,b,c" they dont think and/or not allowed to consider X,y,z, only what the boss says, so you can quote whatever you like, it wont matter to him/her, only what they have been instructed to say/do by the boss.

[Sydebolle]

Happened to me. Paid a booking fee of B20'000 and they wanted to charge 3%. Once the car was ready I wanted to pay the balance with the CC (Visa Citibank Bangkok). The dealer said, that no credit card is good for more than a million; well, mine is because I called them ahead and increased the ceiling which was done due to impeccable records.
The dealer then tried/found out that it works (hardly ever saw such big eyes) but insisted on the 3%. I operate as a merchant here and pay 2% plus VAT, i.e. 2.14%.
I refused but offered to pay cash against a discount of 3%, which he did not want either. I told him that he is breaching the contract (nowhere anything written about surcharging), wanted to leave the store and told him I'd inform the car manufacturer in Bangkok - change of mind, paid with the credit card and drove off. On leaving he told "no need come back Misater" and I never went back, but enjoyed the many, many miles I got credited onto my air points account.

So, if you have the stamina then shop around; there are many dealers around. Latter though don't care about cash as usually almost all cars are financed and the dealer gets the money anyhow. The surcharge though is clearly against the policies of credit cards (or charge cards) which explains, why Amex is so unpopular in Thailand.

Unless an article is clearly shown as "cash only" the surcharge is not legal - but then the dealer can change his mind and insist that he did not want to sell the article - TIT. But as said, stamina prevails 8-)

[CaptHaddock]

The surcharge is not only legal, it is fair. There is no reason the merchant should be forced to eat the VISA charge. Nor should cash customers be required to pay it, which is what happens typically in the US where the surcharge is just levied on all transactions. Since cash customers are on the average lower income than CC customers, it is just one way the middle and upper classes take advantange of the lower-income working class.

[paulbj2]

The majority of Thai staff are told "a,b,c" they dont think and/or not allowed to consider X,y,z, only what the boss says, so you can quote whatever you like, it wont matter to him/her, only what they have been instructed to say/do by the boss.

There is another thing that happens with credit card transactions here in Thailand that I find a bit worrying; most of the time, even if you enter the pin number for a chip and pin card, the staff in shops, restaurants and hotels still insist you sign the chit even though on most of them, it is marked in large, bold print "Signature not Required". The staff never even look at the signature to verify its authenticity so I'm unsure what the point of the exercise might be. I have pointed out before now that it clearly states "Signature not Required" on the chit but they remain completely unmoved and seem suddenly to suffer from complete deafness when challenged about this.

The only thing that worries me the possibility that a signed chit could be used to initiate a second offline transaction but maybe I'm being unduly paranoid on that front.

I guess this is a case of "we have been told to do this by the boss and so we do it without question".

[Pib]

Card surcharging is permitted by a merchant unless against the law in their home country/state. As far as I know surcharging and DCC is not prohibited by Thai laws as it done by quite a few merchants/banks. Now it is still frowned upon by both Visa/Mastercard if legal in a country but Visa/Mastercard can not do anything about it other than try to convince merchants its not in their best interest which probably falls upon deaf ears with many merchants. Visa/Mastercad also frowns upon DCC use (which is also OK unless illegal in a country) since they know many customers will incorrectly blame Visa/Mastercard for the surcharge or DCC when it fact it's the merchant applying the surcharge to make a little more profit/offset the Visa/Mastercard fee.

Now, personally, I do not do business with merchants who apply a surcharge and/or will only accept a DCC transaction with a foreign card--in my opinion they are just greedy merchants trying to make a little extra profit....and when applying a DCC they are just boning the farang who is using his foreign card.

Just for example, below is a snapshot from the Visa site regarding surcharging in the U.S. which is allowed in most states....also included is their webpage which talks more about surcharging.in the U.S.

https://usa.visa.com/support/small-business/regulations-fees.html#2

[paulbj2]

Card surcharging is permitted by a merchant unless against the law in their home country/state. As far as I know surcharging and DCC is not prohibited by Thai laws as it done by quite a few merchants/banks. Now it is still frowned upon by both Visa/Mastercard if legal in a country but Visa/Mastercard can not do anything about it other than try to convince merchants its not in their best interest which probably falls upon deaf ears with many merchants. Visa/Mastercad also frowns upon DCC use (which is also OK unless illegal in a country) since they know many customers will incorrectly blame Visa/Mastercard for the surcharge or DCC when it fact it's the merchant applying the surcharge to make a little more profit/offset the Visa/Mastercard fee.

Now, personally, I do not do business with merchants who apply a surcharge and/or will only accept a DCC transaction with a foreign card--in my opinion they are just greedy merchants trying to make a little extra profit....and when applying a DCC they are just boning the farang who is using his foreign card.

Just for example, below is a snapshot from the Visa site regarding surcharging in the U.S. which is allowed in most states....also included is their webpage which talks more about surcharging.in the U.S.

https://usa.visa.com/support/small-business/regulations-fees.html#2

Capture.JPG

I'm not sure what DCC stands for. Can you enlighten me.

[SwimmingPoolsThailand]

AS one of the TOP 5 swimming pool companies in Thailand, SwimmingPoolsThailand feels morally obliged to offer payment by credit card. However, the company is not legally bound to accept credit cards any more than it is legally bound to serve rude and arrogant customers; the company is also entitled to restrict credit card payments to customers who are actually resident in Thailand. The condition of use of most credit card companies however, forbid merchants to add a transaction surcharge. Credit card fees to the merchant are very high and the merchants do not get their money immediately. 3%, or in some case 5% or even 6.5% represents a lot of money to a small trader on a large transaction.

This is therefore of no use to the merchant whatsoever and is strictly only a convenience to the customer.

If a store does not offer credit card facilities, generally if the customer wants the product urgently and wants to take advantage of any special offers, they will pay cash.

Chargeback fraud is also not unknown and has even been attempted by some expats with pools in Thailand. Fortunately, although it may take time, the credit card company will always find in favour of the honest merchant who keeps impeccable records of their sales and/or services provided.

Customers for pool products and services can rest assured that with SwimmingPoolsThailand, they are dealing with a straightforward, responsible organisation offering genuine money-back policies and prompt guarantee services. When searching online for swimming pool products, always verify that you are on the genuine SwimmingPoolsThailand web site and not on a fake copy. Apart from its distribution centre in Nong Bua Lamphu and its directly owned stores in Chiang Mai, Krabi, and Vientiane, SwimmingPoolsThailand does not operate any swimming pool franchises or subsidiaries.

[Pib]

I'm not sure what DCC stands for. Can you enlighten me.

Dynamic Currency Conversion (DCC). This is where the merchant/local transaction processing bank use their own exchange rate versus the Visa/Mastercard exchange rate. The DCC rate will usually be around 4% lower (worst) than the Visa/Mastercard exchange rate before any additional home country "card-issuing" bank foreign transaction fee may apply. DCC bad for the customer; DCC good for the merchant/local processing bank.

And when I say local processing bank I mean the bank the merchant uses to process card transactions...in turn that local processing bank interfaces with/connects to the Visa/Mastercard network and other other banks to complete the transaction. The receipt for signature will identify the local processing bank the merchant uses to process the transaction using your card....the bank name is usually right at the top of the receipt. It's purely up to the merchant if they use DCC.

Usually when purchasing an item if it was a DCC transaction, the receipt for signature will show the local currency like Thai baht and the currency the card was issued under...like a U.S. issued card would reflect U.S. Dollars. So, if you see two currencies on the receipt they want you to sign, "do not" sign. Say cancel that transaciton and rerun in the local currency/Thai baht. It only takes them about 2 minutes to cancel the old transaction and rerun the new one in local currency only not matter what "some" merchants may say. You may also see the offerred DCC exchange rate on the bottom of the receipt or on a separate slip that prints out of the POS machines which the clerk may keep/not hand to you as if they don't want you to see the lower exchange rate.

Happens to me a couple times a year. When I purchase an item for a Thai merchant who I know or I'm not sure automatically defaults to processing a foreign card using DCC like Pizza Company, HomePro, plus some others when handing my foreign card to the checkout clerk I make eye contact and say, "Charge Thai baht, not U.S. Dollars." And they comply...no issue.

But everyone once in a while even though I told them to charge in Thai baht they mess up and do a DCC transaction...I see the amounts in Thai baht and USD on the receipt for signature, I do not sign, I then say cancel and rerun in Thai baht, it takes them a minute or two to accomplish, I sign the receipt for signature that reflects only Thai baht, and we are all happy. Now the cancelled transaction may still appear on your card account for a few days but will drop off...just in case it don't (mine always have) be sure to keep the cancelled transaction receipts the checkout clerk gives you so you can work the issue with your card issuing bank.

DCC can occur at a ATM also, but the bank ATM will probably not call it DCC but instead Bank Rate, Home Rate, or some other warm and fuzzy name...and they may even reflect the exchange rate which once again will be serveral percent lower than the Visa/Mastercard exchange rate. Decline DCC on the ATM which may also be in vague/confusing terms...usually you would press the wording that says something along the lines of "Continue Without Conversion" which means your want to continue but not using the bank's conversion/exchange rate...it then continues on and you get the Visa/Mastercard exchange rate. Seems Mastercard cards are more susceptible to being offered a DCC transaction on an ATM. Once again, DCC bad for the customer, good for the bank.

Note: and remember don't confuse above fees with any fee your "card-issuing" bank may also apply since many card-issuing banks apply a "foreign transaction fee" typically in the 1 to 3% ballpark. Fortunately, all the U.S. debit and credit cards I use in Thailand do not apply a foreign transaction fee.

Repeat, DCC bad for the customer; good for the merchant/local processing bank.

[WhizBang]

I accept VISA, MC and AMEX as a merchant in USA. As A merchant it illegal to surcharge any customer or refuse any customers card. Should I do that they can and would revoke my privilege to accept any card thereafter.

Curious to know what Merchants TV members can charge without being hit with the transaction charge?

Guess what, this is not the USA. The rules from the USA do NOT apply here. Live with it.

I have 'foreign' credit cards I use here in Thailand. Most merchants no longer charge a 3% or so fee. But some still do. That's the way it is. Usually it seems to be smaller shops that add the fee, but the transaction amount does not seem to be a factor. At least that has been my experience.

[Thunderbirds20]

This is very typical of businesses in Thailand. This country has the worst customer relations I have ever seen and this is just another example of the backward business practices in this country, ... Buyer Beware

[paulbj2]

I'm not sure what DCC stands for. Can you enlighten me.

Dynamic Currency Conversion (DCC). This is where the merchant/local transaction processing bank use their own exchange rate versus the Visa/Mastercard exchange rate. The DCC rate will usually be around 4% lower (worst) than the Visa/Mastercard exchange rate before any additional home country "card-issuing" bank foreign transaction fee may apply. DCC bad for the customer; DCC good for the merchant/local processing bank.

And when I say local processing bank I mean the bank the merchant uses to process card transactions...in turn that local processing bank interfaces with/connects to the Visa/Mastercard network and other other banks to complete the transaction. The receipt for signature will identify the local processing bank the merchant uses to process the transaction using your card....the bank name is usually right at the top of the receipt. It's purely up to the merchant if they use DCC.

Usually when purchasing an item if it was a DCC transaction, the receipt for signature will show the local currency like Thai baht and the currency the card was issued under...like a U.S. issued card would reflect U.S. Dollars. So, if you see two currencies on the receipt they want you to sign, "do not" sign. Say cancel that transaciton and rerun in the local currency/Thai baht. It only takes them about 2 minutes to cancel the old transaction and rerun the new one in local currency only not matter what "some" merchants may say. You may also see the offerred DCC exchange rate on the bottom of the receipt or on a separate slip that prints out of the POS machines which the clerk may keep/not hand to you as if they don't want you to see the lower exchange rate.

Happens to me a couple times a year. When I purchase an item for a Thai merchant who I know or I'm not sure automatically defaults to processing a foreign card using DCC like Pizza Company, HomePro, plus some others when handing my foreign card to the checkout clerk I make eye contact and say, "Charge Thai baht, not U.S. Dollars." And they comply...no issue.

But everyone once in a while even though I told them to charge in Thai baht they mess up and do a DCC transaction...I see the amounts in Thai baht and USD on the receipt for signature, I do not sign, I then say cancel and rerun in Thai baht, it takes them a minute or two to accomplish, I sign the receipt for signature that reflects only Thai baht, and we are all happy. Now the cancelled transaction may still appear on your card account for a few days but will drop off...just in case it don't (mine always have) be sure to keep the cancelled transaction receipts the checkout clerk gives you so you can work the issue with your card issuing bank.

DCC can occur at a ATM also, but the bank ATM will probably not call it DCC but instead Bank Rate, Home Rate, or some other warm and fuzzy name...and they may even reflect the exchange rate which once again will be serveral percent lower than the Visa/Mastercard exchange rate. Decline DCC on the ATM which may also be in vague/confusing terms...usually you would press the wording that says something along the lines of "Continue Without Conversion" which means your want to continue but not using the bank's conversion/exchange rate...it then continues on and you get the Visa/Mastercard exchange rate. Seems Mastercard cards are more susceptible to being offered a DCC transaction on an ATM. Once again, DCC bad for the customer, good for the bank.

Note: and remember don't confuse above fees with any fee your "card-issuing" bank may also apply since many card-issuing banks apply a "foreign transaction fee" typically in the 1 to 3% ballpark. Fortunately, all the U.S. debit and credit cards I use in Thailand do not apply a foreign transaction fee.

Repeat, DCC bad for the customer; good for the merchant/local processing bank.

Thanks for explaining that so clearly and comprehensively. I'll keep an eye out for that in future. Having said that, I tend to use my local Bangkok Bank card as much as possible these days then most of the problems mentioned in this conversation don't arise, except of course the 3% surcharge that was the subject of the original post.