Nets, or Network for Electronic Transfers, is raising its transaction fees for retailers in three batches starting July 1 - the timing of which has also come under fire because it coincides with the 2 per cent goods and services tax hike.
Now, isn't this smart? Raise the fees together with the GST increase and the resulting increase in prices can be 'hidden' or explained away as: its due to the GST! It's due to retail merchants profiteering on the GST!
Seriously, NETS is just another profiteering monopolist profiteering from the GST hike. And we are not talking about a small increase here, it is an up to 300% increase!
The rates will go up from the current 0.35 and 0.55 per cent of purchases to between 1.5 per cent and 1.9 per cent - this represents an up to three-fold increase in the amount merchants will have to pay for each transaction.
And in the land of competition of Singapore, where commercial viability is oft cited as justification of government, GLCs, private businesses, we see it in this issue again:
Chief executive officer Poh Mui Hoon said the system will be squeezed out of the market if it does not raise its rates: 'It is a tough but commercial decision that we have to make. We haven't raised rates for 22 years, it has to be done.'
But excuse me?! NETS is not charging a flat fee in the first place, but instead it is a percentage fee. We have always heard that companies cutting costs, cutting prices to maintain competitiveness and commercial viability, and calls for workers to accept lower wages to ensure our competitiveness with the cheaper China/India/SEA workers. But in the case of NETS it is a monopoly RAISING rates to prevent it being SQUEEZED out of the market???
What a way to turn competitiveness (This term was actually used in zaobao as justification for the hike) and commercial viability on its head.
And since they talk about the competition being strong, let's look at who is behind NETS and who are their competitors.
Nets, which is owned by DBS Bank, OCBC Bank and United Overseas Bank...
Banks, she said, have been aggressively promoting and issuing debit cards because they get more money each time these cards are used. Each transaction with a debit or credit card earns the bank between 1.15 and 1.69 per cent of the purchase price.
Now now, it seems that their 'competitors' are actually themselves, as the 3 major banks in singapore most probably have the largest debit/credit card market share here. Except in the case of debit/credit card, the international card company(VISA/Mastercard etc) takes a share of the fee.
Compare the NETS after hike rates of "between 1.5 per cent and 1.9 per cent" to the 1.15-1.69 percent of debit/credit cards... Now we really see what this competiveness/commercial 'viability' really means.
After this hike, NETS would most probably be just as expensive to use as credit/debit cards, and if this is the case, I see no point in using NETS anymore. NETS does not offer the consumer any reward points/discounts, it does a direct debit the moment the transaction takes place (as opposed to debit cards where the money is deducted a few days after), it has a lower charging limit (of $2000, if I remember correctly), and now it is more expensive.
So much for a cashless society, and not to mention the biggest group of people that will be ripped off are those older people who have no knowledge/access to debit/credit cards.
I do hope CASE's complaint does go through, but given the Singaporean system I am not optimistic.
Source: Case slams Nets fee hike as a 'great disservice'