Previously, Visa and MasterCard prohibited merchants around the world from passing on credit card transaction fees to customers - the rule was even written into law in some American states. Merchants are also not allowed to impose minimum purchase requirements for credit card payments.
In Singapore, these rules are stated in the contract that merchants sign with the acquiring banks, which process the credit card payments. Swipe fees here are at least two to four per cent of each credit card transaction.
A check by MediaCorp showed that retailers, especially mom-and-pop stores, are coming up with creative ways to work around the rules, such as discounts or other perks to encourage customers to pay by cash. Some are openly flouting them, taking advantage of the low level of awareness among consumers.
On thin-margin businesses, small purchases made by credit cards are unprofitable. Gaming shop Tec-Drome at Sim Lim Square offers customers a discount on video games if they pay by cash. Owner Woo Liah Meng said it would otherwise be "terrible doing business".
According to Mr Woo, the swipe fees have increased for his business over the years, from one per cent to the current four per cent per transaction.
"I couldn't continue like that, especially these days customers pay everything using credit card, even if it's a small amount. How to survive?" he said.
He added that many other retailers at Sim Lim Square also tell customers to withdraw cash from an ATM when they ask to pay by credit card.
Curtains shop MGL Curtains also started offering a discount for customers in the past year if they pay by cash or Nets.
Italian restaurant Porta Porta, which has two outlets, waives the service charge when customers pay by cash. The restaurant, which has been in business for 13 years, started this practice this year.
"We get to save on the (swipe fees) and, at the same time, reward our customers. So it's a good deal," said owner Daniel Naino, who is paying about two per cent for Visa and MasterCard transactions, and 3.3 per cent for American Express transactions.
While these merchants do not violate any rules by offering incentives to customers who pay by cash, many others do by putting up signs informing customers that they must chalk up a minimum purchase in order to use their credit cards.
Consumers in the dark
The number of credit card transactions are on the rise.
MasterCard figures show that, during the first month of the Great Singapore Sale this year - which ended last Sunday - the number of transactions increased by 15.4 per cent to almost 5.45 million, compared to the same period last year.
On average, consumers are also spending more: According to Credit Bureau (Singapore) statistics, the average monthly balance last year was S$4,807, up by 4.45 per cent compared to 2010.
Without providing figures, a MasterCard spokesperson told MediaCorp: "We do believe that small-value credit card transactions are on the rise as we continue to see an increase in consumers using electronic payments for everyday purchases."
Enforcement actions are only triggered by complaints: Acquiring banks here will serve errant merchants a warning letter based on tip-offs.
What many consumers are not aware of is that they can lodge complaints against retailers who impose credit card surcharges or demand minimum purchases.
While banks here put the onus on consumers to know their rights, Consumers Association of Singapore (CASE) Executive Director Seah Seng Choon reiterated that public education efforts should be stepped up.
Pointing out that the number of such complaints to CASE have been small due to the lack of awareness, Mr Seah said: "Banks need to be a lot more explicit in informing customers about their rights, so that consumers don't pay different prices for the same product or be inconvenienced by the need to pay cash only."
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