DTI mulls ban on surcharges

BY KRISTINE L. ALAVE, BusinessWorld Reporter The Trade department is drafting an administrative order that prohibits retailers from charging their customers additional fees when they purchase goods using credit cards. Victor Dimagiba, director of the Bureau of Consumer Welfare and Protection, questioned the business practice of displaying two tags -- one for cash and another for credit card purchase. "The retailers are passing on the surcharges to customers. We prohibit that," he told BusinessWorld. Mr. Dimagiba said the Price Tag Law mandates retailers to use one price tag. He said the Trade department had received reports that retailers charge their clients 3% to 7% in credit card surcharges. The additional price, he added, is not normally reflected in the tag. The proposed Trade department administrative order, he said, would put a stop to the practice of having two separate prices for different modes of payments. "All retailers who honor credit/ATM/debit cards for payment shall not require cardholders to pay a surcharge, extra charge, or additional charge over and above the price tag on consumer goods and services," the draft order said. It added that credit cardholders must be protected from retailers who impose credit surcharges over and above the regular price tag on goods and services. Officials of the Philippine Retailers Association criticized the proposal, saying they would not impose the charges if credit card companies do not charge them transaction fees. Samie Lim, PRA chairman emeritus, accused the Trade department and credit card firms of misinformation for saying that retailers are passing additional charges on consumers. "If the credit card company is charging me something, it’s my cost," he said. But the Credit Card Association of the Philippines (CCAP) said they support the order. Citibank Philippines, a CCAP member, said the fees they charge retailers are minimal. Mark Jones, Citibank country manager, said they only charge retailers 2% to 3% of the purchase price as processing fees. Mr. Lim, whose family owns the Automatic Appliance chain of stores, said the appliance sector would be the hardest hit by the order. This is because almost half of their clients pay using credit cards, especially for pricier consumer electronic products such as televisions and mobile phones. Appliance vendors, he added, have profit margin of only 5% to 10%. He said the group would challenge the order, adding that members would refuse to honor credit card payments if the plan goes ahead.