NETS: A CASE Study
Not surprisingly NETS‘s (Network For Electronic Transfers Singapore) recent announcement of a hefty transaction fee increase has gotten small retailers, businesses and consumers all riled up. The payment service will be raising its transaction services from July 1 from the current 0.35 and 0.55 per cent of purchases to between 1.5 and 1.9 percent – almost a four-fold increase.
This is certain to hit retailer bottomlines badly. 1.5-1.9 per cent of the price of a transaction may not sound a lot, but one needs to consider that profit margins on each item can vary greatly. And with more than six million NETS users and some 700,000 transactions daily, the fear is that retailers will have no choice but to push the fee increase onto consumers.
Local consumer watchdog Consumer Association of Singapore (CASE) is livid, and in a press conference has denounced the move as a “great disservice” and will be “moving to register a complaint for monopolistic practices”. CASE argues that retailers are pretty much held at ransom. After all, NETS – whose shareholders include DBS Bank, OCBC Bank and UOB Bank – deploys a network of some 30,000 NETS transaction points through 13,000 NETS merchants across Singapore. A boycott of the service is pretty much out of the question – since it started in 1985, NETS has already gained a strong foothold here. Senior citizens and children alike are used to NETS as a convenient alternative payment method, and can’t get access to credit cards. Of course they can apply for debit cards instead (which then makes it even more lucrative to the banks mentioned above).
But the fee hike may have more far-reaching consequences. Today most Singaporeans use eNETS, which is part of NETS, as a key web payment method for online government services such as applying for a business license online, settling town council bills or paying a fine. Would it also be farfetched for the hike to extend to online business payments solution BuyButtonz, (which I previously blogged about) which is used by online retailers, also part owned by NETS?
Only time can tell. Meanwhile, retailers can only bite the bullet, and advise customers to use other payment methods instead. Any responsible – and practical – retailer would.
Combined with the upcoming GST hike, it looks like consumer spending in Singapore is going to take a hit.
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