Why merchants surcharge Credit cards and refuse International Cards

[WorkingTourist]

[…] I have MasterCard and they didn't want to accept it […] seemed to think I may not pay him and explained MasterCard pay you […]

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

MasterCard pays him, yes. But if the card is stolen or you do a chargeback, there is a good chance the merchant loses the amount and may even be stuck with the original fee and an additional chargeback fee.

Has happened to me more times than I care count.

Merchants inside the U.S. are also charged a fee for taking payments via a credit card, but VISA/MasterCard do what they can to hide this fact from the customer (like the terms the OP refers to), and furthermore, they incentivize the customer to use their credit card over cash by giving them reward points.

Personally I find it refreshing to see Thai businesses punish only credit card users with the 3% fee rather than hide it in the price.

This is an actual expense for them, so someone has to pay it!

[Acharn]

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.

The credit card companies make it a part of their contract, to get a merchant account the merchant must promise not to add a surcharge. I'm not sure if that applies to overseas accounts. In recent years I've never had anyone try to add the surcharge to me. I now use Visa, but many years ago when I used American Express I always had 3 or 3.5% added.

[WorkingTourist]

Happened to me […] no credit card is good for more than a million […] insisted on the 3% […] offered to pay cash against a discount of 3% […] 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.

Your purchase was in the millions? So you basically had the merchant eat a fee of tens of thousands of baht just so that you could get some miles on the card?

I don’t get why you felt entitled to a 3% discount if you didn’t use the card, as the credit card fee was not part of the price. If you buy a car using a credit card without hassle, then I can see why the next customer who pays cash should be the one entitled to a 3% discount (or whatever the fee is), but clearly there was a lot of hassle, because someone was about to lose 2.14-3% of the agreed upon price.

Expensive purchases in Thailand are often handled via bank transfer or cashier’s check, which is probably why they don’t have a sign saying that there is a 3% surcharge when you want to pay your car or condo using a credit card (yes, someone actually wanted to pay his condo with a foreign credit card and was similarly upset that the seller did not accept it).

[F4UCorsair]

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.

I believe when a merchant signs on with a credit card provider he signs on to accept their cards, and if he refuses, can have his privileges stopped, i.e., the card company refuses to deal with him , because it's part of his contract with the card company.

Ultimately that costs the merchant money, so it's in his interests to fall in line with the rules and his undertaking.

Swimming Pools Thailand (post above) may be right when he saws a company is not "legally" bound to accept a card, but the card company can refuse to do business with him if so.

Edited May 5, 2016 by F4UCorsair

[DrDave]

I'm curious as to whether a merchant in Thailand is always charged a flat rate, thus knowing in advance what their actual cost of accepting a credit card payment for a particular transaction will be.

From my experience operating a business in the US, we never knew the cost of a transaction at the point of sale. Each network (Visa, MC, AMEX) had different charges and fees for various components of a single transaction (such as validation, processing, etc). It was never a flat rate. Additionally, "premium" cards (like airline and hotel affinity cards which provided "points" or cash back to their holders) always attracted a higher rate than basic cards from the same network. Finally, transactions involving foreign-issued cards could have a bottom line transaction cost as high as 7-8% depending upon the transaction amount. If we were to take a monthly average, it generally worked out to about 3.5%, but we never knew the actual cost of a given transaction until we received a monthly statement from our processor.

[TallGuyJohninBKK]

Two points:

1. I think part of the problem the OP had here is due to the business involved being a car sales operation. If you're expecting fair or reasonable businesses practices, they'd not be at the top of my list.

2. Living here for many years now, I pay for most everything I do with my foreign (home country) bank cards, at least at places that accept cards at all. At places that accept cards, I rarely if ever have had any of them try to charge me a bank card surcharge on the stated price. Though there are some smaller shops that only accept cash, which I encounter more often than places that try to charge a surcharge.

In fact, I was surprised earlier this week. Went to buy a new TV at PowerBuy at CentralWorld in BKK. Agreed to the stated/listed price for the item on the shelf. Then the salesman asked how I wanted to pay, cash or card, and I answered card. He replied, great, you'll get a 5% discount off the shelf price if you pay by card. And I thought, OK, that's probably one of the Thai bank card promotions that stores sometimes offer. So I replied, but, my card isn't a Thai bank card, but rather a foreign card. And he replied, didn't matter, I'd get the 5% discount anyway. And sure enough I did, for a straight-out purchase, no financing involved. Just wish THAT happened more often...

[Gillyflower]

In France, I can pay with any card providing the shopkeeper's machine is geared. For instance I can't use my Amex at my hairdresser. Presumably she doesn't have an agreement with them. I have spoken with several merchants and they put the costs of these cards in their overheads.

I buy a lot of books from all over the world. With big companies, there is no problem, they accept whatever I wish to use. But in England (VERY backward), the small bookshop won't accept cards except PayPal (the costs being cheaper than Visa, Mastercard etc.) OR send cash by the post. and I have to pay the PP charges. NZ, Sth Africa same thing except they don't except me to pay PayPal charges.

Edited May 8, 2016 by Gillyflower