SINGAPORE - E-commerce giant Amazon has announced that it will impose a 0.5 per cent surcharge on Visa credit card transactions on its Singapore website, Amazon.sg, from Sept 15.
An Amazon spokesman told The Straits Times that Singapore is the first country where this surcharge will be imposed, but added that the high cost of accepting card payments is a global problem.
The surcharge will apply to most purchases made on Amazon.sg, such as apparel and consumer electronics sold by third parties, or Amazon itself, from Singapore or overseas.
However, groceries from Amazon Fresh, digital goods and services such as in-app purchases on Amazon service Twitch, as well as subscription schemes such as Amazon Prime will not be affected by the surcharge.
Purchases from other Amazon websites remain unaffected for now, even when they are shipped to Singapore.
When asked why the surcharge was being imposed only in Singapore, Amazon declined to comment.
However, the company said its goal was not to collect revenue from the surcharge, but to encourage consumers to use better, lower-cost payment methods, while preserving their choice and deferring the additional cost of high-cost payment methods.
An e-mail sent to users of Amazon.sg on Tuesday (Aug 10) attributed the surcharge to Visa's high cost of payments.
"To avoid this surcharge, we encourage you to use a debit or non-Visa credit card as the default payment method in your account," it added.
The Amazon spokesman also told ST that the cost of accepting card payments continues to be an obstacle to providing the best prices for customers.
"These costs should be going down over time, with innovation and technological advancements, which allow merchants to reinvest savings into low prices and shopping enhancements for customers," he said.
"Yet, despite these advancements, some cards' cost of payments continues to stay high or even rise. As a result of Visa's continued high cost of payments, a surcharge is being added to Visa credit card payments in Singapore.
"With the rapidly changing payments landscape around the world, we anticipate a future that is less card-centric in the coming years, and we will continue innovating on behalf of customers to add and promote faster, cheaper and more inclusive payment options to our stores across the globe."
When contacted by ST, Visa said: "Visa maintains that the simplest, most economically efficient and consumer-friendly approach is for merchants to not surcharge consumers for using cashless payment methods. Consumers who choose to pay with cards should have to pay for only the cost of the service provided or purchased item."
It also said it believes merchant surcharging has a negative impact on consumers and businesses.
When ST visited competitors Shopee and Lazada, no such surcharge was observed as yet upon attempting to check out with a Visa credit card.
According to statistics from payments industry research firm Nilson Report, cards from Visa accounted for 34 per cent of global card payment transactions in 2019, while Mastercard accounted for 19 per cent.
Visa is the second largest provider in the segment, followed by Mastercard in third place. They both rank behind UnionPay, which largely serves the Chinese domestic market.