Currently, noncash payment is very popular in almost transactions. Compared to other forms of electronic payment, payment by bank cards through card swipe machines is still the primary choice of many subjects, especially for consumers in purchasing, selling, or using services.
In some cases, when making a payment through a card swipe machine, customers are required to pay an additional fee called a “card swipe fee” besides goods, services, and VAT. However, this fee is not required at all stores that receive card payments, only some stores require this fee. This raises questions for consumers about whether or not a “card swipe fee” is a mandatory fee according to the law.
Within the scope of this article, the author will focus on solving the above question by analyzing and explaining the provisions of Vietnamese law.
1. Definition of card acceptance devices
Card acceptance devices at the selling points, including Point of Sale (hereinafter referred to as POS), Mobile Point of Sale (hereinafter referred to as mPOS), and other types of card acceptance devices which are card readers and terminal equipment installed and used at stores where cardholders can use the card to pay for goods and services.
Currently, almost banks will provide free card acceptance devices to stores that use the card payment service of the banks. For some small shops that do not have enough funds to use the card service or in cases where they only need to use it for a short time to receive payments at fairs and events, the option to rent a card acceptance device becomes an optimal and selected solution.
2. Regulations of Vietnamese law on payment by card in stores
To receive payment for goods and services by card, stores need to sign a card payment contract with credit institutions or foreign bank branches (“Card Acceptance Organization”) which are allowed to make card payments under the laws. Accordingly, the card payment contract is an agreement between the Card Acceptance Organization and the stores or with the international card organization and the card-switching organization (if any) on accepting payment for goods and services by card.
After entering into a card payment contract, the stores are obliged to comply with the signed contract and have the right to request the Card Acceptance Organization to make a trace request and complain about the mistaken transactions or a transaction in doubt about a mistake and are entitled to claim damage under the law.
Generally, the stores will have to pay a fee to the Card Acceptance Organization for each card payment through the POS machine7. This fee will vary from the organization and typically ranges from less than 1% to 2% per payment transaction by domestic card and from 2% to 3% for payments by international card.
The requirement on card swipe fees affects the profits of the stores so many places have devised a plan to transfer the responsibility for paying this fee to customers through collecting “card swipe fees“. However, it should be noted that the “card swipe fee” is thoroughly against the law.
According to Article 23.1 of Circular 19, stores must notify publicly in writing of non-discrimination on the grounds of price or receipt of additional money and charges for card transactions payment for goods and services compared to cash payment. The charge for “card swipe fee” from customers is a prohibited act according to Article 8, Circular 19, and may be imposed an administrative fine of up to 50,000,000 VND (for individuals) or 100,000. 000 VND (for organizations) if violations are detected. In addition to being fined, the defaulting organization/individual may be forced to return the illegally collected amount and/or not be allowed to sign payment contracts with other card payment organizations during the time the violation is not resolved8.
Although Vietnamese law has quite clear provisions on the sanction for collecting “card swipe fees“, the above situation still occurs frequently due to several difficulties coming from the ability to be controlled by competent agencies and organizations. Therefore, consumers need to pay attention to this issue to avoid losing money when shopping and using services at stores.
Disclaimer: This article is for general information only and is not a substitute for legal advice. Apolat Legal is a Vietnamese law firm with experience and capacity to advise on matters. Please click here to learn more about our services and contact our lawyers in Vietnam for advice via email info@apolatlegal.com.
