Jan 25, 2007

10% interchange surcharge, mobile payments, and other rants

Sitting in a cab from Singapore's Changi airport into town, I decided to pay by plastic for once. I had just gotten off the phone, and found myself thinking that actually it might be pretty cool to pay the cab fare just by tapping my phone against a contactless reader, if such things were deployed here in Singapore. One drawback with mobile payments is that people sometimes forget their phones behind while they are far less likely to forget their wallets, but I was feeling so bullish that I started thinking that maybe people would pay more attention to their phones if they were a payment method.

Anyway, that stuff isn't available here so instead I used my HSBC debit card (MasterCard Electronic, if you want to know), issued here in Singapore. I was promptly and unexpectedly charged 10% extra for the intense enjoyment of using plastic rather than cash.

Here's what the receipt says:

TOTAL FARE 17.90
ADMIN 10% 1.79
GST 5% on ADMIN 0.09
TOTAL PAYABLE 19.78

No, you're not mistaken: to add insult to injury they add GST on the 10% administrative fee!

I'm not using my card in a cab again, no matter how convenient it is. I even chose to use a debit card on purpose, and was immediately debited the full amount (I checked my account on-line a few hours later). Where's the logic in that?

How about using my mobile phone to pay in a cab? No thanks, not if I have to pay a surcharge for the great fun and convenience of tapping my phone against a contactless reader. It's back to cash for me from now on.

Our industry is putting so much energy into contactless and mobile payments. Everyone is so bullish and excited. If only we would put as much energy into finding ways to avoid seeing cab drivers hike up the cost of paying by plastic. What’s really bothersome is that the only solution seriously being considered by the mainstream industry is to simply eliminate interchange fees.

1 comment:

mjdol said...

Your statement "What’s really bothersome is that the only solution seriously being considered by the mainstream industry is to simply eliminate interchange fees." is not true. I've been to a retail merchant website that explains the issue in detail and discusses solutions...none of which includes the elimination of interchange fees. God Bless...mjdol