Are Merchants Permitted to Impose Surcharges on QRIS or Credit Card Payments? Understanding the Applicable Legal Provisions

Introduction

Technological advancements facilitate consumers in conducting payment transactions through non-cash methods, such as the Quick Response Code Indonesian Standard ("QRIS") and credit cards. Payment Service Providers (Penyedia Jasa Pembayaran, "PJP") impose a Merchant Discount Rate ("MDR") on merchants or providers of goods and/or services for each non-cash transaction. However, in practice, many merchants or cashiers pass on the costs associated with the MDR to consumers in the form of an additional fee or surcharge. This imposition forces consumers to pay a nominal amount greater than the original price of the products they purchase. Therefore, Bank Indonesia issued a regulation prohibiting the imposition of this surcharge to protect consumers and maintain the smooth operation of the digital payment system.

Legal Basis

Bank Indonesia Regulation Number 23/6/BI Regulation/2021 on Payment Service Providers ("BI Regulation 23/2021") governs the implementation of the Payment System, including the prohibition on imposing surcharges on service users. The provisions regarding this prohibition along with the supervisory obligations by the PJP are set forth in:

Article 52 paragraph (1) of BI Regulation 23/2021

"Providers of Goods and/or Services are prohibited from imposing a surcharge on Service Users for the fees imposed by the PJP on the Providers of Goods and/or Services."

This provision prohibits merchants or providers of goods and/or services from passing on to consumers the payment service fees imposed by the PJP. In a payment transaction, consumers pay the price of the goods or services without any additional charges arising from such service fee. The service fee imposed by the PJP shall be the responsibility of the providers of goods and/or services.

Article 52 paragraph (2) of BI Regulation 23/2021

"The PJP is obliged to ensure the compliance of the Providers of Goods and/or Services with the prohibition as referred to in paragraph (1)."

This article obliges the PJP to ensure the compliance of providers of goods and/or services with the prohibition on imposing surcharges on consumers. In its implementation, the PJP needs to conduct supervision and guidance for partners utilizing the payment services it provides. With this obligation, the PJP participates in ensuring compliance with the provisions of Article 52 paragraph (1).

Sanction Risks for Violators

A violation of the prohibition on imposing surcharges may result in consequences for both the providers of goods and/or services and the PJP. Under BI Regulation 23/2021, these consequences include:

1. Termination of cooperation: Under Article 51 paragraph (2), the PJP is obliged to terminate cooperation with providers of goods and/or services that commit acts which may be detrimental and/or are not in accordance with their designation in processing payment transactions using access to specific Sources of Funds. This provision may serve as the basis for terminating cooperation with providers of goods and/or services that continue to impose surcharges on consumers.

2. Administrative sanctions for Payment Service Providers: Under Article 56 paragraph (1) and paragraph (2), a PJP that violates the provisions of Article 52 may be subject to administrative sanctions by Bank Indonesia in the form of a reprimand, temporary suspension of part or all activities including the implementation of cooperation, and/or revocation of the license as a PJP.
   

Strategic Steps to be Taken

To support compliance with BI Regulation 23/2021, Payment Service Providers, consumers, and businesses may take the following measures:

1. Reporting Violations: Consumers may retain evidence of violations in the form of photos of the payment machine screen, screenshots of the QRIS application, or payment receipts, and subsequently report them to the relevant bank or digital wallet provider so that the PJP can take measures to terminate the cooperation as set forth in Article 51 paragraph (2).

2. Filing Complaints with Bank Indonesia: If the report to the PJP is not followed up, consumers may forward the complaint along with the transaction evidence to the Bank Indonesia Consumer Service (BICARA 131) so that Bank Indonesia can conduct an evaluation in accordance with its authority.

3. Conducting partner supervision and audits: In order to fulfill the provisions of Article 52 paragraph (2), the PJP needs to conduct supervision of its partners and provide a reporting mechanism that facilitates the identification of providers of goods and/or services that still impose surcharges.

4. Removing the surcharge component from the system: Businesses need to adjust their cashier system (Point of Sale) so as not to add surcharges when consumers use electronic payment methods, in accordance with the prohibition in Article 52 paragraph (1).

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Recommendations

Businesses and the PJP may consider the following measures to support compliance with BI Regulation 23/2021:

1. Factoring MDR Costs into the Pricing Structure: Businesses may review the pricing structure of goods or services by taking into account the MDR rate as part of operational costs. This measure can help businesses manage transaction costs without imposing surcharges on consumers.

2. Clarifying the provisions in the cooperation agreement: The PJP can ensure that the Cooperation Agreement contains provisions regarding the prohibition on imposing surcharges on consumers as well as the consequences for violating these provisions. This measure can support the implementation of the PJP's obligation to ensure the compliance of providers of goods and/or services as set forth in Article 52 paragraph (2).
   

Closing

BI Regulation 23/2021 on Payment Service Providers prohibits providers of goods and/or services from passing on to consumers any surcharge arising from payment service fees imposed by the PJP. This prohibition applies to various non-cash payment methods, including QRIS and credit cards, as set forth in Article 52 paragraph (1). In addition, Article 52 paragraph (2) obliges the PJP to ensure the compliance of providers of goods and/or services with this prohibition. In the event of a violation, the PJP is obliged to terminate cooperation with the providers of goods and/or services in accordance with Article 51 paragraph (2), whereas a PJP that violates the provisions of Article 52 may be subject to administrative sanctions by Bank Indonesia in the form of a reprimand, temporary suspension of part or all activities including the implementation of cooperation, and/or revocation of the license as a PJP under Article 56. To support compliance with these provisions, consumers may retain transaction evidence and submit complaints to the PJP or Bank Indonesia if they encounter surcharge practices. On the other hand, the PJP needs to ensure the compliance of its partners with the applicable provisions, while businesses need to adjust the payment systems used so as not to impose surcharges on consumers. Businesses may also factor MDR costs into their operational costs, and the PJP can clarify the provisions regarding the prohibition on imposing surcharges in the cooperation agreement with its partners to support the implementation of obligations as set forth in BI Regulation 23/2021.