The 3% conundrum

According to a friend of mine who’s a senior banker, says that sometimes it may not be even 3%, as the establishments can negotiate with the banks on the rates, meaning that some establishments could be paying 1.5% and charging 3%, meaning that they make an additional profit out of my hard-earned money.

A regular consumer walks into a commercial establishment with the need to purchase an item. After browsing around, he makes a decision and proceeds towards the cashier. After handing over the item that he wanted to purchase, he produces his debit card and the cashier says,

"Sir, there will be a 3% surcharge on card payments"?What would you do? Take 10 seconds and think about your answer.

Every commercial establishment in the country is provided with POS machines, payment gateways, and many other technological facilities by their banks so they can attract various customers and serve them better. And it is only fair that the bank charges the establishment a fee for providing the facility. Now this 3% in question is the 3% of the transaction that the establishment has to pay to the bank,?not the consumer,?and despite banks advising businesses not to do so, many commercial establishments continue to do so even as we speak. And I find this a daylight robbery, as we are in no way supposed to pay their bank fees after giving them business.

There was an argument made on behalf of this action where a business owner claimed that their margins are very small, so, therefore, they cannot pay a transaction fee to the bank, and as a person who runs a business myself, I’ll have to say quite frankly,?"it is not my problem"!?If that is the case, please do not accept my business via card; deal with only cash. Your margins will remain safe, but you’ll not have many customers due to your failure to adapt to the ongoing market trends. And as you know, the laws of the economy of scale, more units at lower prices is also a way to grow a business, while leaving that to the vendor to decide. I do not think any establishment should charge me an additional 3%.

According to a friend of mine who’s a senior banker, says that sometimes it may not be even 3%, as the establishments can negotiate with the banks on the rates, meaning that some establishments could be paying 1.5% and charging 3%, meaning that they make an additional profit out of my hard-earned money.

Now let me explain what made me write this. A well-known "transformational coaching" institute sent me their rates this morning (08.09.2021) and the complete payment for the entire certification was around LKR 292,000.00. They further said that there would be an additional 3% which would be charged to me if I paid by credit card. Since this is not a small amount, I did the math and realized that the 3% accounted for LKR 8,760.00, which I had to pay to the institute so that they Yes, I need to pay by credit card. Maybe because I don’t have enough funds to pay at once, but this is Sri Lanka during a pandemic. I don’t think anybody has funds to spare. And even if we did, why should we?

I'm a very small businessman who charges my clients what I feel I deserve to be charged. Although some people claim that I could charge more for the services I offer, I honestly don’t feel arrogant about overcharging my clients because there’s some kind of moral compass that prevents me from doing so. And for some stupid reason, I expect people and businesses to have a sense of right and wrong as they grow. And if your business loses its ethical ground as you grow, it’s not the business that’s becoming unethical; it is YOU, the business owner... Because a business is only a mechanism that runs according to the directions you give, and believe me when I say this, no amount of charity can cover that up.

I just want to say, charge your customers what you think they are worth. Don’t hesitate. If he/she can pay, they’ll purchase it, but please don’t lie to your customers or the bank that entrusted you with providing them with their facility. Because upon questioning, what you tell me is?"It’s not for us, it's the bank that charges this"?Yes, the bank does charge it, but they charge it from YOU, not from ME. If YOU can’t pay it, please inform the bank, inform the customer, and continue the business on a "cash only basis," which is completely fine. But if you think of ever using a facility that is lent to you by a reputed financial institution, and you get involved in such malpractices, you’re tampering with the brand and the reputation of the financial institutions as well. Because an angry customer may just call the bank and yell at the call center or make false allegations about the bank among his network. And it’s all simply because one establishment got greedy with paying for what they borrowed.

If you’re reading this, and you’ve been subjected to something in the past, here’s what you do hereafter. As you know, NO establishment can charge you 3% or any percentage for that matter as a transaction fee. Refuse to pay that 3% as they can’t change that. And if they refuse? Walk away. The only way that we could correct this is through active protest. Because it is illegal for any commercial institute to charge a transaction fee and they have been advised not to do so by their banks. If there is a legit surcharge that needs to be charged, the bank will charge it to you upon the swipe, after which they will send you an SMS or some kind of communication saying that they did so.

Let’s stop being victims of this scheme that exists in plain sight and take a rightful stand as responsible consumers, be it 1 Rupee or 1 Million Rupees.