Saudi Gazette report

JEDDAH — Many shop owners in various parts of the Kingdom refuse to accept credit cards for payments and asked shoppers to pay in cash for their purchases, Makkah daily reported on quoting market sources.

The sources said the Ministry of Commerce and Investment has considered this to be a violation of the rules and regulations and said shop owners should not refuse to accept the credit cards especially when they place stickers at shop fronts or near cash desks announcing that they do accept payment by credit cards.

The ministry, however, said if the shops do not have such stickers they will be free to accept or refuse payment by both debit and credit cards.

The shop owners attributed their insistence on cash payment to the high percentage of commissions deducted by banks on credit card purchases.

The ministry said the consumers can file complaints against shops by calling its toll free number 1900 or the through the ministry’s website.

The shop owners said some times the cut made by the banks on credit card payments was more than the profit margin.

A shop owner, who refused to be identified, said the banks reduce about 0.8 percent of the value of the purchases paid for by cards.

He explained that for each SR1,000 of purchase the banks cut about 8 riyals.

However, the cut on the payment by credit cards such as Visa, MasterCard and others, is 2.5 percent.

Mohammed Al-Otaibi, an investor in the mobile phones sector, said the drop in sales has compelled many shop owners to insist on cash payment because the reductions made by the banks on the value is very high. For a purchase of SR5,000, the bank reduces about SR32 leaving little room for making a profit.

Otaibi asked the concerned authorities to change this policy by reducing the percentage of commission deducted by the banks or fix a monthly fee for using the point of sale service.