People shouldn’t be penalised for paying with cards, says VISA


The workshop in progress

This practice, known in the financial industry as surcharging, was discussed during a VISA card acceptance workshop held for merchants at the STC conference centre yesterday.

Many merchants said they were unaware or unsure of the legalities around passing on bank card point-of-sales (POS) transaction costs to customers as an additional charge, with various participants in the hotel and car hire sectors saying they had seen or heard of instances where clients had been charged extra for using bank cards as a method of payment.

Vladimira Karabencheva, VISA’s head of acceptance in East Africa, said that unless explicitly permitted by law, VISA merchants were not allowed or recommended to pass on these charges to the customer.

“Surcharging is not the right approach, because to a certain extent you are limiting your customer’s choices. What you can do is offer the customer an incentive or discount on a certain deal to pay with cash instead,” said Ms Karabencheva.

“It is one thing to be offered a discount for paying cash, but it is another thing to feel that just because you don’t have any cash and there is no ATM nearby, I am being penalised for using my card.”

“Another thing you can consider is to include the cost of bank transaction charges when you prepare your pricing, in addition to all your other operational costs,” Ms Karabencheva suggested.
Ms Karabencheva said making it more difficult for tourists to pay for goods and services would be detrimental to the tourism industry.

“Seychelles is an exotic location that most people dream of coming to for their honeymoon or special occasion, and that’s why I think that spoiling such a nice holiday with negative experiences will be bad for the industry, especially as tourists from Europe and the United States are not used to the concept of surcharges.”

Representatives from the FTC at the workshop confirmed that like most other countries in the world, legislation in Seychelles prohibits the practice of surcharging.
According to the Consumer Protection Act, the price displayed in the shop should be the price the customer pays.

The FTC plans to run advocacy programmes in the near future to clarify merchants’ responsibilities surrounding service charges and also to educate consumers on their rights.

VISA is the largest electronic payment network in the world, with a presence in over 200 countries and territories and collaborates with businesses, financial service providers and governments to power the global economy and facilitate the transfer of electronic payments all over the world.

According to market research commissioned by the electronic payments giant, the advantages of processing electronic transactions far outweighed the perceived disadvantages.
“One of the reasons why electronic payments are so popular across the world is because businesses have realised that cash is not free,” said Ms Karabencheva.

She explained that transacting mainly in cash increased the risk of theft and fraud from unregistered transactions, and said the cost of resources to handle, manage, transport and safely deposit cash remained high. Processing more electronic transactions minimises the risk of robbery and it also proves to be easier for accountants to reconcile payments through bank records.

“Card payments also mean more customers, which in turn means increased spend,” said Ms Karabencheva. “When I’m sitting in a restaurant with a card in my pocket, I don’t worry about whether I have enough cash on me to pay the bill afterwards.”

VISA’s market research confirmed the theory, showing that on average, card-paying customers spend three to five times more than customers who use cash.

“Tourists especially don’t want to carry cash,” said Ms Karabencheva. “They don’t want to go to the beach and take 200 Euros with them, but they also don’t want to have to get into their car and look for an ATM every time they want to buy a beer. When you are on holiday, you want to relax and have a good time, not worry about where your money is or how you are going to draw money all the time.”