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EVERY credit-card purchase involves a merchant.
Here are the steps in the
purchase:
The cardholder selects an item,
agrees to pay the retail price to the merchant and represents
credit-card payment.
The merchant submits the purchase
details, including the card details to the acquiring bank for
approval;
The acquiring bank sends the
purchase details to the issuing bank.
The merchant receives a payment
guarantee and the cardholder receives the item.
The issuing bank remits to the
acquiring bank the retail price less the merchant service charge or
merchant discount.
The acquiring bank remits to the
merchant the retail price less the merchant service charge or
merchant discount.
The merchants fee/service
charge/discount are negotiated directly between the acquiring bank
and the merchant. This fee or charge or discount is calculated as a
percentage of the value of the goods purchased or services availed
of by the cardholder.
Then the merchant signs an
agreement with the card company that it will not jack up his prices
for credit-card users.
Discussing the subject of
credit-card holder complaints, Bangko Sentral Governor Amando M.
Tetangco Jr. said the Department of Trade and Industry and
credit-card companies “are reviewing their interpretation of the
Price Tag Law.”
This developed after retailers
and credit-card companies questioned the DTI’s Department
Administrative Order (DAO) 10 disallowing the use of two prices in a
single price tag of an item, one for cash payment and the other for
credit-card purchases.
Many of the complaints received
by the BSP Consumer Affairs Unit is about cardholders being charged
more when they pay by credit card.
Under the Price Tag Law,
consumers who pay in cash shall pay only the price indicated on the
price tag. The law also says that those who pay through a
credit/ATM/debit card shall pay only the price indicated on the
price tag.
The practice of retailers
offering consumers an option to pay in cash, card or on installment
is allowed provided the payment options “shall be disclosed by way
of a separate information to the consumer” but not on the price
tag. Merchants are not allowed to display price tags indicating a
separate cash price and a credit-card price tag for a product or
service.
Alex Ilagan, Credit Card
Association of the Philippines (CCAP) president, earlier said that
before any merchant can offer credit-card payment facilities to its
customer, it signs an agreement with the credit-card company that it
would not impose surcharges on credit-card purchases.
In the eighties, gas stations and
grocery stores were the most common merchants that imposed
surcharges on credit-card purchases but appliance stores and travel
agencies have since joined in that bad bandwagon, Ilagan said.
Some stores apply surcharges on
their goods without having to indicate the percentage of surcharge
by offering “discount” prices for cash payments and higher
prices for purchases by credit card.
Merchants should not impose
surcharges, since it would deter customers from purchasing on
credit, especially big-ticket items like appliances and electronics.
He said data show that
credit-card use significantly contribute to the sales of a business
establishment and deterring customers from using this would
negatively affect merchant sales
The Price Tag Law mandates the
protection of credit/debit card and automatic teller machine (ATM)
users from sellers and retailers who impose surcharges or additional
amount over and above the price tag on the goods and services they
buy with the plastic cards.
So, will credit-card holders’
complaints about surcharges added to the cash price by merchants
ever be settled?
It’s the DTI’s law enforcers
who can prevent this bad practice from continuing.
How about those who have already
been victimized?
--Maricel Burgonio
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