Extra Charges For SGD Transactions Processed Overseas

Did you know that you could be charged extra by your credit card company (bank) when you make a purchase (online or retail) in SGD currency from a Singapore-registered company? The distinguishing factor is where the payment is processed, and Standard Chartered Bank is one such bank that charges extra for SGD transactions that are processed overseas. Of course the merchant would deny an over-charge responsibility, saying that they charged the correct amount, and the bank would deny likewise, claiming that the terms state quite clearly that there would be an extra charge for such cases, so where does that leave the consumer?

Here’s an example to make things clearer: You make an online purchase from Groupon Singapore website (www.groupon.sg), which is owned and operated by Beeconomic Singapore Pte Ltd, which is a Singapore-registered company with a registered address in Singapore. The amount indicated on purchase is quite clearly in SGD, say S$50. You use a Singapore-registered credit card from say, Standard Chartered Bank to make payment. No “foreign currency” is involved, and therefore you should receive a credit card bill of S$50 from Standard Chartered Bank right? Wrong! The amount would be approximately 1% more.

From Standard Chartered Bank Terms and Conditions: “All overseas transactions (including transactions converted into Singapore Dollars via dynamic currency conversion) and foreign currency transactions charged to VISA International cards will be subject to a prevailing charge of 1% of the transaction amount representing the charge imposed by VISA International on us. All overseas transactions (including transactions converted into Singapore Dollars via dynamic currency conversion) and foreign currency transactions charged to MasterCard International cards will be subject to a prevailing charge of between 0.2% to 1% of the transaction amount representing the charge imposed by MasterCard International on us.”

What exactly happens is that Groupon Singapore processes payments in Europe under Groupon International. So the bank registers the transaction as an overseas transaction, which qualifies it as a “transaction converted into Singapore Dollars via dynamic currency conversion”, and therefore the bank has the right to charge extra. Actually, according to the T&C, it is Mastercard and Visa that charges this fee, but then why is it that other banks are able to absorb this fee? Or maybe all banks also put this fee on the customer, I do not know. (For information, UOB is another bank that has a similar charge.)

And when I grilled Groupon about this, I was referred to this clause on the website’s T&C: 5.5 All monetary transactions made by customers on www.groupon.sg are handled by Groupon International GmbH. For inquiries please contact eu-payments@groupon.ch., which is far from explicitly stating that payments are not processed in Singapore.

Thereafter, I called Paypal Singapore to check on this and found out that its payment processing hub is in Singapore, so there would be no similar problem occurring. So use Paypal whenever possible to make online payments, if you aren’t already doing so.

But it doesn’t stop at just Groupon, or Paypal, or the next online portal. I’ve heard of retail transactions in SGD made in Singapore incurring similar extra charges, and brushed them off as one-time errors. But now I think it must be due to the fact that these payments were processed overseas somehow. Clearly there is some lack of transparency or access to readily-available information in our current system, because surely we can’t go around asking the merchant (likely a clueless sales rep) each time we make a credit-card payment right? If the banks are distinguishing between transactions, consumers have a right to know which category a transaction will fall into, BEFORE the transaction is made, and not after. The next time you make a S$10,000 purchase with a credit card in Singapore, it might be wise to ask where the payment will be processed, or you might end up with an extra (up to) $100 charge you didn’t plan on getting.