Susan Gordon, Business Reporter

A branch of National Commercial Bank (NCB) at the corner of Duke and Barry streets, Kingston. NCB has raised debit card processing fees by 60 per cent. - FILE

Hit by a 60 per cent increase in bank processing fees charged by the National Commercial Bank (NCB) this month, merchants have responded by raising the minimum spend for transactions using debit cards, some by 150 per cent more.

Bank of Nova Scotia Jamaica Limited - which along with NCB are Jamaica's two largest commercial banks - also plans to raise its processing fees for merchants November 1.

By raising the limit on debit card transactions, the merchants hope to manage the number of transactions they will have to pay fees on to their bank.

"The bank raised the merchants' fees by 60 per cent," said operator of Shoppers Fair Supermarket in Kingston, Albert Lym, suggesting that the charge eats into his revenues.

New minimum purchase

Lym has already set a new minimum purchase of $500 in his stores.

"We don't want to do this but the circumstances dictate," he said.

On October 1, NCB increased its debit card processing fees from $6.50 to $10.50, advising merchants of this increase as far back as August.

BNS has not said how much its fee would be boosted by, but it currently charges $8.25.

RBTT Bank charges its merchants $7.20 plus General Consumption Tax, while FirstCaribbean International Bank charges $21 for debit card processing fees and $31 on multilink cards at point of sale terminals.

The bank charges are strictly a commercial decision outside the remit of the central bank to police.

"There's no regulation that we have that speaks to the governance of that," said a senior officer at the Bank of Jamaica (BoJ).

Moral hazard

"It's a moral hazard to regulate because if they set the rate based on BoJ's imposition we can be blamed for any loss suffered," said the BoJ officer.

A quick survey across the island by the Financial Gleaner showed that in most business places, the merchants now demand a minimum $200 to $300 expenditure on average for debit card purchases.

But at the gas pumps, it is not unusual for merchants to demand three times the average as minimum for fuel purchases. The requirement is often more stringent for 87 octane or regular gas, perhaps because its volume sales tend to be higher, than for 90 octane - at $500 and $200 respectively.

But a Petcom service station operated by an independent on Slipe Road, Kingston has, since October 1, set a $1,000 limit.

- susan.smith@gleanerjm.com