I received a few comments that I should view those hefty 'discounts' on credit cards as 'discounts' and people without credit cards are paying a 'normal' price at restaurants and shops. This is hogwash. Businesses have costs to cover and when they give discounts to a group of people, the rest are penalised. Credit card companies such as Visa use monopolistic practices that forces businesses not to charge higher prices when the credit card is used although the card company charges the 3% for each transaction otherwise they will remove the credit card facilities. This forces businesses to raise their prices for customers using cash for purchases. The same practice is used by NETS. Businesses are unable to give discount to those using cash although the cost of transacting in cash is lower. But these tie-ups and business tactics a just the tip of the iceberg. Credit cards uses fees and penalties to exceed returns they get in excess of the 24% rate. Companies can go beyond this 24% to charge something like 28%[Link]....highly predatory.
We don't even have laws to protect consumers from security loopholes and breaches on these cards. For example, the use of credit cards don't require a pin which makes it less secure than, say, the NETS payment system. However, when these security loopholes are exploited, it is the customer that has to pay up under our laws. Take the example of this woman:
The case goes something like this : a woman's wallet was stolen from her hand bag but she didn't realise it. The thieves used the card to charge $17K for purchases and close circuit TV at various shops captured the thieves using the card. Woman discovered the cards missing and made reports to the credit card companies and police....but it was too late. Under our laws the woman is now liable for the $17K. Still want to apply for every credit card under the sun to get those discounts? Use your card online? This is just one example of regulation needed to fix security flaws to protect consumers having a pin number would prevent all these cases of theft. Credit card companies that make hundreds of millions every year in Singapore cannot afford to fix this? There are many things to fix with credit cards and our Consumer Association and authorities are just not proactive.
Many countries have stepped up efforts to reform this industry[Link][Link][Link]. USA being the latest. If you want to get a good understand of the credit card industry and how it can harm consumers and society in a big way here's a Frontline documentary [Link].