Consumers can expect to pay more with higher NETS levy
By May Wong, Channel NewsAsia | Posted: 05 June 2007 2214 hrs

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SINGAPORE: Consumers can expect to pay more when paying by NETS from next month.

This is because NETS is imposing a higher levy on retailers, who could pass on this extra cost to consumers.

Some merchants are also reconsidering whether they will still accept payment by NETS.

NETS now charge businesses between 0.35 and 0.55 per cent of the amount of each transaction.

Starting July, this will be increased gradually to between 1.5 and 1.8 per cent of purchases.

Since it will be more expensive to cater for NETS payment, the next time customers settle their bills, they may be able to choose only cash or credit.

Sakae Sushi sees about 20,000 customers everyday.

About 2,000 of them pay their bills using NETS.

But now that the company has to pay NETS higher administrative fees, it foresees that more customers will turn to other payment modes like credit cards very soon.

"It's definitely going to impact on our business quite drastically. With the very steep increase in NETS administrative fee, currently we might be paying similar to international banks for their administrative fees as well.

"So probably, we will need to reconsider offering NETS services to Sakae Sushi customers," says Joyce Lee, Marketing & Communications Manager, Sakae Sushi.

And customers may have to pay more if merchants find a way to pass the higher fee.

The Association of Small and Medium Enterprises says one way to do this is by offering products at a higher costs.

"When you buy something, they say, what are you paying by? Are you paying by cash or NETS? Traditionally, they accept NETS as a form of cash.

"What will happen in the future is that they'll say, are you paying by cash or NETS? NETS, extra 1.5 per cent, that's what's going to happen," says Kurt Wee, Vice-President, Association of Small and Medium Enterprises.

NETS says it does not allow retailers to charge customers using NETS but cannot guarantee their latest move will not affect consumers.

"The retailer at the end of the day has to decide how to package his offering to the consumer, we have no control over that," says Poh Mui Hoon, CEO, NETS.

NETS also hit back at the Consumers Association of Singapore or CASE, saying the analogy used to describe the higher fees is misleading.

CASE had likened the NETS levy hike to that of a Toyota pricing itself as a Lexus.

"It's probably more accurate to say that NETS has been providing Toyota quality type of services for the past 22 years and charging only bus fare rates and not the Lexus example that was provided. We're now only moving to a re-aligning of prices to Toyota service that we're providing," says Poh.

In response, CASE maintains that the justification put up by NETS to increase their fees is questionable and made no sense, especially since CASE knows that businesses will eventually factor in the higher cost into the price of their goods and services.

CASE has filed a complaint to the Competition Commission of Singapore concerning this matter. - CNA/yy