Payment cards remain as one of the most widely used payment instruments in Malaysia for physical and online retail transactions. The sustained growth in the use of payment cards over recent years has to some extent been supported through measures implemented by Bank Negara Malaysia (Bank) under the Payment Card Reform Framework (PCRF) in 2014. The PCRF has also helped derive other notable outcomes including the declining average Merchant Discount Rate (MDR) which has benefitted many merchants through lower payment acceptance cost, which ultimately would also benefit the cardholders.
To sustain the positive impact from the PCRF, the Payment Cards Framework (PCF) policy document enhances existing measures in line with the changing payment card landscape. A key update in the policy document is the revised interchange fee ceiling, which is determined through a transparent process using industry data, to reflect current processing costs of a payment card transaction. This seeks to ensure that the interchange fee, which will translate into the MDR, remains fair to both payment service providers and merchants.
This policy document also introduces measures that will enable merchants to better manage their payment card acceptance costs and address other frictions in the payment cards ecosystem to foster greater usage and acceptance of payment cards. Merchants are given greater flexibility to choose the types of payment cards they wish to accept based on business considerations, subject to the acceptance of debit cards as a bare minimum. At the same time, increased transparency obligations on surcharging practices among merchants coupled with expectations for service providers to establish appropriate mechanisms for cardholders to lodge complaints against such practices are expected to further strengthen cardholder’s user experience. Greater emphasis on industry accountability to manage surcharging behaviour acknowledges that rules on surcharging are being set and enforced by the operators of the payment card network on their participants. Notwithstanding, the Bank will continue to monitor the practice of surcharging among merchants and ensure that it is not prevalent.
With these enhancements put in place, the Bank expects that the payment cards landscape will continue to thrive as payment service providers, merchants and cardholders benefit from the sustained strong growth in payment cards usage in years to come.
This document belongs to Bank Negara Malaysia (BNM). Full access to the original source is available here: https://www.bnm.gov.my/banking-islamic-banking
