UAE local businesses ponder premium credit cards refusal after usage fees hike

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Local businesses in the UAE are rallying support to put pressure on credit cards such as Platinum, Titanium, Black and Infinite in retaliation to a rise in commission fees from Network International, Visa, MasterCard and banks. The current commission figure varies between businesses but the average is believed to be around 1.5%, equating to a rise of 0.75%.

Network International, a regional payments solution provider, has issued a letter warning businesses that fees on premium credit card payments will rise to 2.25% as of 1st July.

According to a Gulf Business report, the letter details how local businesses will lose out on 2.25% of the sale when accepting premium credit cards from customers. The fee is divided between Network International, Visa or MasterCard and the local bank that issued the card.

In the letter Brian Quarrie, executive vice president at Network International, said: “We have lobbied hard with the schemes to avoid any increase in the processing cost of premium card transactions, but unfortunately this decision has not been reversed.

“Network International has done its best to bear this burden till date but apparently it has become difficult to continue with the same rates and therefore we are compelled to revise your rate for all premium card products with effect from 1st of July 2012…now attract a commission of 2.25%.”

The move is expected to affect local businesses across the UAE when it comes into effect next week.

Most of the local banks in the UAE, including Emirates NBD, Mashreq, Abu Dhabi Commercial Bank and Abu Dhabi Islamic Bank, issue premium credit cards.

The letter did not mention the name of the body which had taken the decision to raise the fees. Local businesses insist they are still in the dark about the decision factors. However, MasterCard were adamant it was out of their control.

“It is MasterCard’s customers that manage the relationships with consumers and merchants, set annual fees on cards, determine annual percentage rates, solicit merchants to accept cards or set their discount rates,” Eyad Al-Kourdi, vice president and country manager, UAE, MasterCard Worldwide, said.

Network International provides credit card payment processing services to 70 banks and 17,000 merchants in the region. It also has partnerships with global networks including American Express and Diners Club.

Many local businesses in the UAE are pondering whether to refuse acceptance of all premium credit cards, while admitting the move as a last resort.

“Our last course of action is to decline premium credit cards but that’s not something we want to do as it causes problems for the customers. But we’re being left with no option,” a manager of an international restaurant told Gulf Business on condition of anonymity.

UAE is an emerging tourism hub and widespread acceptance of international payment cards and systems has been key to its sterling status as a top regional and seventh leading international emerging retail market.

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