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March 22, 2018

Malaysian central bank tells retailers not to charge extra on card payments

Bank Negara Malaysia (BNM), the central bank of the country, has stated that retailers are prohibited from imposing surcharges on both debit and credit payments.

“Consumers who encounter merchants who impose such surcharges are advised to lodge a complaint with their respective banks or payment card issuers,” the central bank said.

BMN made the statement in response to an article titled “Consumer body: Abolish surcharges on credit cards” published on Free Malaysia Today (FMT) on 19 March 2018.

In Malaysia, surcharges for payments using debit cards are barred under the Payment Card Reform Framework introduced by BNM, and a similar prohibition is applied for credit card payments under the rules of international card schemes such as Visa and Mastercard.

BNM added that one of the reasons such transaction fee was imposed is to recover the cost incurred by the retailers during acceptance of card payments, where they are required to pay the merchant discount rate (MDR).

To reduce the cost-to-retailers during electronic payments, the Malaysian bank launched measures such as the Payment Card Reform Framework and the Interoperable Credit Transfer Framework.

These measures are expected to in turn lower the pressure for retailers to impose charges on customers.

A statement from the bank read: “To benefit from lower operational cost, retailers are encouraged to accept the more cost-effective payment methods, i.e. debit cards and mobile payments (instant fund transfers).

“Retailers who cannot afford to pay the higher MDR for credit card are encouraged to liaise with their respective acquiring bank to accept only debit card payment.”

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