Network for Electronic Transfers, NETS, is owned by DBS, OCBC and UOB and it has just recently announced that transaction levies are going to be upped by between 0.75 and 2 percentage points over 3 months from 1 Jul 2007. This is going to be pegged at between 1.5 and 1.8 per cent of purchases bringing the levy close to credit-card transaction fees which stand at about 2 per cent for Visa transactions and around 3 per cent for American Express.
While around 83 per cent of Singaporean residents currently use NETS for purchases in a strong embrace of cashless transactions, many retailers are starting to advise customers to pay cash or pay more for purchases.
The levy increase appears to be against the original purpose of NETS, to offer alternative system for cashless payment.
While NETS tries to justify that it is facing increasing competition from international card schemes and the increase is necessary to maintain its viability, insisting that NETS transaction fees are still the lowest in the market, it fails to deliver good logic.
Which business raises prices when consumers are not using its products? With the advent of debit cards, cashcards and other more innovative products, NETS is under intense competition and it appears to have made the wrong strategic move in trying to maintain revenues.
More worrying is the fact that NETS is owned by DBS, OCBC and UOB. While these banks had been paying minimal interest rates for savings deposits and lending it out at high rates, pocketing handsome profits, they had opted to squeeze more profits out of retailers with this NETS levy increase. When the backlash against this increase materialises and consumers start abandoning NETS and paying in cash instead, banks are likely to start considering charging consumers for the use of the automated teller machines and cornering the consumer even more.
Consumers are on the way to the guillotine, to be placed at the mercy! Woe!
While around 83 per cent of Singaporean residents currently use NETS for purchases in a strong embrace of cashless transactions, many retailers are starting to advise customers to pay cash or pay more for purchases.
The levy increase appears to be against the original purpose of NETS, to offer alternative system for cashless payment.
While NETS tries to justify that it is facing increasing competition from international card schemes and the increase is necessary to maintain its viability, insisting that NETS transaction fees are still the lowest in the market, it fails to deliver good logic.
Which business raises prices when consumers are not using its products? With the advent of debit cards, cashcards and other more innovative products, NETS is under intense competition and it appears to have made the wrong strategic move in trying to maintain revenues.
More worrying is the fact that NETS is owned by DBS, OCBC and UOB. While these banks had been paying minimal interest rates for savings deposits and lending it out at high rates, pocketing handsome profits, they had opted to squeeze more profits out of retailers with this NETS levy increase. When the backlash against this increase materialises and consumers start abandoning NETS and paying in cash instead, banks are likely to start considering charging consumers for the use of the automated teller machines and cornering the consumer even more.
Consumers are on the way to the guillotine, to be placed at the mercy! Woe!
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