Proposal to Require Banks and Payment Firms to Disclose Interchange Fees for Processing Credit or Debit Card Transactions

Mr Murali Pillai asked the Prime Minister whether MAS will consider requiring all banks, including digital banks, and payment firms providing services under the Payment Services Act to disclose what they charge as interchange fees for processing credit card or debit card transactions so as to provide for a more competitive landscape for such services in Singapore.

Mr Tharman Shanmugaratnam (for the Prime Minister): Merchants are charged a processing fee for credit and debit card transactions by payment service providers (PSPs), be they banks or other providers, such as NETS. The processing fee, commonly known as the merchant discount rate (MDR), includes the interchange fee 1 which is set by card schemes, such as Visa and Mastercard.

MAS agrees with Mr Pillai that transparency is important to foster an efficient and competitive payments ecosystem. PSPs, currently, already provide information on their MDR to merchants. This enables merchants to negotiate with PSPs for better MDRs and to opt for PSPs that offer the most attractive deal. Merchants can choose cheaper modes of e-payment acceptance, such as PayNow or SGQR, which have been gaining stronger traction over time.

As information on MDR is already freely available to merchants, there is no need to mandate disclosure of MDR at this point. The payment services industry has become highly competitive, especially with the influx of new players. PSPs compete with one another to offer cheaper or more attractive services to secure merchants and, indeed, there is a significant churn amongst merchants switching from one PSP to another.

Note(s) to Question No(s) 2:

1 Interchange fee is paid by PSPs to card issuers for processing transactions made by credit and debit cardholders.