Traders ready to ditch DuitNow over extra charges

Kalidevi Mogan Kumarappa Diyana Ibrahim

Traders say they will not hesitate to switch to cash transactions if additional charges are imposed on DuitNow payments. – The Malaysian Insight file pic, September 30, 2023.

TRADERS are ready to go back to dealing with cash or use other methods if additional charges are imposed on DuitNow payments.

They told The Malaysian Insight the withdrawal of the merchant discount rate (MDR) on the use of DuitNow QR codes effective November 1 will have an impact on them as well as the consumer.

They said charging them a fee was not appropriate, especially when many small traders are still recovering from the Covid-19 pandemic, and are struggling due to the increase in goods prices.

Brickfields restaurant operator Mohd Azrin Anver Ali said the majority of traders have objected to the implementation of additional charges on transactions.

He said it would force them to pass the cost on to consumers by raising the price of food due to the implementation of the fees. 

“It will burden traders and we fear the cost will have to be absorbed by consumers later,” he told The Malaysian Insight.

Payments Network Malaysia Sdn Bhd (PayNet), which operates the DuitNow QR code, recently clarified that a four-year waiver on the MDR charge on merchants is due to expire on November 1, 2023.

The MDR on DuitNow is charged based on a percentage of the payment transaction value. A merchant would receive the payment made by their customers after deducting the MDR.

Debit and credit card payments are currently already subject to MDRs.

Yesterday, Prime Minister Anwar Ibrahim gave his assurance that the transaction fee charged to vendors would not burden low income groups.

He said the decision to lift the waiver on the MDR for vendors was made by Bank Negara Malaysia.

“Right now, what’s important is that the low income groups are not burdened (by the lifting of the waiver),” he said.

The owner of a cafe in Petaling Jaya, Allyn Chia, 49, similarly objected to the charges, which he considers to be a burden on traders.

Chia believes this is due to the monopolistic policy of providing services when most business transactions turn to digital finance.

He said the policy opens up opportunities for service providers to make excessive profits.

“This DuitNow QR application really makes matters easier but right now we are also dealing with the increase in the price of raw materials.

“The government and these service providers should not add to our burden with new charges.

“This is all happening because the service provider dominates the market and traders will have no other choice but to comply with the new charges,” he said.

Payments Network Malaysia Sdn Bhd, which operates the DuitNow QR code says the four-year waiver on the merchant discount rate is due to expire on November 1, 2023, of which Debit and credit card payments are currently subject to. – EPA pic, September 30, 2023.

Another restaurant owner in Cheras, Jawahar Ali, 59, said the transaction charges would add to operating costs which would indirectly lead to an increase in the price of food and drinks.

“Of course I don’t agree with the transaction charges, especially in this current economic situation where operating costs are increasing. 

“This will cause the price of goods to increase,” he said.

The owner of a fast food shop in Kajang, M Annadurai, 49, meanwhile described the transaction charges as punishing traders and consumers who have switched to digital financial applications.

He admitted that he would not hesitate to switch to cash transactions if the charges were implemented.

“I’d better go back to cash transactions. My profit margin is already small, plus the increase in the cost of raw materials, and now transaction charges as well.

“There seems to be no plan to reduce our burden, only increasing it,” he said.

Government intervention

Ampang Small Traders and Hawkers Association president Ayob Abd Majid urged the government to intervene on the issue.

He said the move to impose charges was not appropriate at this time when traders were facing various challenges as a result of economic problems.

Furthermore, he said the majority of traders were now switching to digital transactions because it made it easier for them and also consumers.

He said traders were also never informed about the existence of the charges by the service providers.

“it is not right for traders to be charged and these fees implemented at this time.

“With traders now having to bear the increase in the price of essential goods currently, now they also want to charge DuitNow transaction fees.

“This situation is very burdensome for traders and many have started to close their businesses,” he said.

In a statement, PayNet said the MDR was waived to promote QR payments in 2019 and the service was extended due to the Covid-19 pandemic.

It added that the collected MDR is shared between the company and banks or third-party acquirers to cover network maintenance and expenses associated with on-boarding merchants.

Paynet has downplayed concerns over price hikes due to the MDR on DuitNow, pointing out that products and services purchased with credit or debit cards are priced the same as cash purchases.

Maybank and Public Bank have announced that they will be maintaining the MDR waiver on DuitNow payments until further notice, while CIMB Bank has said that the waiver will stand until year-end. – September 30, 2023.

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