The State Bank of Vietnam imposed a strict regulation on May 13 that imposes hefty fines on retailers who charge additional fees on credit card transactions. PHOTO COURTESY OF TUOI TRE.
On Thursday afternoon, Minh Dung went to a cell phone shop on Le Van Sy street in Ho Chi Minh City's District 3, looking for a mobile phone. He chose an iPhone priced at VND 14.5 millions (US$686).
After learning that Dung intended to complete his payment by credit card, a shop keeper told him he'd be charged an extra of 3 percent (around VND435,000).
The shop keeper claimed the bank established fee and the shop had no choice but to comply with it.
“The phone therefore cost closer to VND15 million”, Dung was quoted by Tuoi Tre (Youth) newspaper as saying.
The scene played out two days after the State Bank of Vietnam filed a regulation establishing that charging customers for a single credit card transaction could cost retailers a fine of between VND30-50 million.
But despite the regulation, businesses have continued charging fees on credit card payments.
The fees come on top of the central bank's previously established sanctions: a one-year suspension of credit card machine for first time violators, and three to five-year machine suspensions for repeat offenders.
Last Friday in Ho Chi Minh City's crowded downtown shopping district, salesmen at a camera shop located on the first floor of the Tax Trade Center said they charged a 2 percent user fee on all card transactions.
A camera, priced at VND9.2 million, would therefore incur a “card user fee” of VND184,000.
“The banks charge us 2 percent, so we have to charge customers the same amount,” explained a salesman, pointing to two card readers, one from Agribank and the other from Vietcombank.
Other retailers claimed they were simply passing usage fees imposed by banks onto their customers. If the banks lower their fees, they said they'd quit charging credit card users right away.
Some also said they only made a humble of 1-3 percent on each sale, so bank fees on credit card transactions have the potential to totally wipe them out.
Too many to inspect
Tuoi Tre reported that banks blame their lack of oversight on a lack of human resources
Several bank managers admitted that they'd received complaints from customers about card transaction fees, but they haven't taken any steps to survey their users so far due to the huge number of card readers they've churned out
Le Duc Tho, general director of VietinBank, said the bank would terminate its contract with any retailer who charged customers additional fees on credit card transactions and take back their card readers.
“The [machines] placed at shops help them attract more customers, so it’s fair for them to pay us back," said Tho in an interview with Tuoi tre.
"The fee also eliminates risks involved in accepting cash payments, such as counterfeit money, and helps save on clerical steps like counting and managing cash… Any fees we charge are based on their sales, they're not allowed to charge customers for that.”
Tho suggested customers who were charged extra fees send their complaints to the bank so that it can fine offending retailers.
ACB’s Individual account manager Tu Tien Phat said the bank will formally notify all retailers accepting their credit cards about the State Bank regulations.
He added that banks retailers a common fee of 2 percent of the total sales on credit card transactions.
Some card readers charge even lower, from 1.6 percent to 1.8 percent. He said these usage fees had fallen too low to reduce any further.
Lorilon Bacchi, Visa Group’s Indochina Manager, said that three years ago there were many more retailers that charged customers user fees for card transactions, and that the group has taken back card readers from many shops.
A bank leader, speaking on condition of anonymity, said that retailers need to make around around 10 percent profit, unless they're selling gold or airline tickets.
It's still unclear if the state bank plans to launch any inspections of retailers accepting credit cards.