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TODAYonline - February 9, 2007

Caught in a Nets bind
Retailers upset over plans to raise Nets transaction fees to as much as 2% from April

Christie Loh
christie@mediacorp.com.sg

AT ABOUT 5.30pm today, two opposing camps will square off in the halls of the Singapore Chinese Chamber of Commerce and Industry (SCCCI).

The issue on the table: Higher fees that retailers will soon have to pay for transactions processed by the Network for Electronic Transfers (Nets), which some feel may translate into higher prices for consumers.


Currently, merchants pay Nets 0.55 per cent of the sales transacted using the payment system if the amount is under $20,000 monthly. Sales above $20,000 but below $100,000 incur a 0.45-per-cent charge.

But from April 1, Nets plans to raise its fees to between 0.75 per cent and 2 per cent for some 13,000 merchants using its cashless system.

Today learnt that the rate paid by each merchant will depend on which industry he is from. One of the hardest hit will be the jewellery sector, which may have to cough up 1.7 per cent of transacted totals, said a source.

He added that many small businesses were upset at the timing of the increase: "The GST hike, employers' contribution to CPF soon to go up ... everything seems to be happening at the same time."

After hearing the concerns of several members, the SCCCI approached Nets to arrange the closed-door dialogue.

"The SCCCI feels that such a fee hike will add to the existing high business costs and adversely affect our local retailers," the chamber said in a statement yesterday

From Nets' perspective, however, the fee increase is inevitable.

Today understands that banks — which issue cards for credit, debit and Nets — have started asking Nets to pay an "interchange fee" for transactions processed. Banks already levy such a fee on credit and debit card companies such as Visa and MasterCard, which in turn pass on the cost to retailers.

"Nets needs to raise transaction fees across the board to include the interchange fee. The price realignment exercise ensures Nets' viability as a business," said Mr Ivan Ong, vice-president for Nets payment and value-added services.

Without giving specifics, he added that the company would introduce schemes to help loyal merchants boost their sales and better manage business costs.

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