Currency charges on credit card transactions: MAS replies

The imposition of international transaction fees by credit card companies (for example, MasterCard and Visa) is a global practice and is not unique to Singapore ("Currency charges for local services unfair" by Mr Ambar Gupta; Nov 26, and "Make merchants pay for currency charges" by Mr Tay Huay Khoong; Forum Online, Nov 25).

An international transaction fee is charged whenever a customer's credit card payment is processed overseas.

Typically, this happens when a cardholder travels overseas and makes a purchase from an overseas merchant in foreign currency.

The transaction will normally be reflected in the credit card statement in both foreign currency and the equivalent in Singapore dollars.

The converted amount in Singapore dollars would include the international transaction fee, which could range between 0.8 per cent and 1 per cent of the transaction value.

Some cardholders have also noticed this fee being applied on online purchases denominated in Singapore dollars, even when the goods or services are provided in Singapore.

This occurs when merchants use entities outside Singapore instead of banks in Singapore to process their credit card payments.

Cardholders' payments are routed overseas for processing, thereby incurring an international transaction fee.

The Monetary Authority of Singapore (MAS) agrees that there should be better transparency on such fees.

MAS is working with the relevant agencies to encourage more prominent disclosures by local merchants at the point of purchase, should they process their payments overseas.

This will enable consumers to make better-informed decisions.

We also encourage consumers to familiarise themselves with such charges via the MoneySense website.

Consumers making online credit card purchases are advised to verify with the merchant whether payments are processed overseas and, hence, whether an additional international transaction fee could apply.

Bey Mui Leng (Ms)
Director
Corporate Communications
Monetary Authority of Singapore

A version of this article appeared in the print edition of The Straits Times on December 08, 2015, with the headline 'Currency charges on credit card transactions: MAS replies'. Print Edition | Subscribe