Merchant Surcharge has been a practice where additional fees/charges are added on to a stated price or bill for goods or services in the event that a customer opts to use a card as their choice of payment and is usually levied to a payment transaction when using Point of Sale devices (POS) or sometimes merchants impose a minimum transaction amount as a condition for accepting electronic payment methods.
The Financial Services Industry regards this as an expensive and unfair business practice, which is detrimental to the growth of electronic payments in the country. This practice is also not part of the terms and conditions for operating Point of Sale Machines.
On the 29th of August 2019, Bank of Uganda issued a circular prohibiting the levying of merchant surcharges, imposition of minimum transaction amounts for acceptance of payment by cards and directed supervised financial institutions to monitor activities of merchants and report any non-compliance with these directives.
Bank of Uganda reserves the right to impose penalties for non-compliance to the above including penalizing the issuer/acquirer financial institution who has contracted such a merchant.
The Acquirer or Issuer Bank for the respective POS terminal reserves the right to blacklist & terminate this service from the merchant. Merchants are therefore advised to:
• Accept electronic payments unconditionally.
• Honour consumers preferred payment option of using a card
• Eliminate surcharges for use of cards at Point of Sale terminals.
• Stop imposing minimum transaction amounts for payment by cards.
Financial Institutions will work with all industry stakeholders to protect consumers and discourage the practice of surcharging and imposing minimum spend amounts in the market, including consumer and merchant education campaigns.
Bank customers and the general public are advised to reject any additional charges levied by merchants when they make payment using their credit/debit cards through POS and notify their respective bank each time any additional charge is levied on them when they use their cards to make payments for goods and services.
Customers are further advised to channel feedback in instances where this practice occurs.