When the Price Tag Law becomes anti-consumer

When the Price Tag Law becomes anti-consumer

In the past couple of years, I have been a bit vocal with PC shops and gadget stores that brandish two separate price tags for their items — one is for the cash price and another more expensive price for credit card buyers. I always try and make them hear me whisper that it’s against consumer interest to have two pricing schemes.

How I wish there was a strict law implementing a one-price policy. So, I was excited to learn that the Price Tag Law was passed and being enforced by the DTI. However, I also realized that Filipino business owners, being the wiser, will find ways to go around this new law and it will be against consumer interests.

So, I proved this theory last night. When I bought my new iPod Video, the price tag that was displayed in the window was actually Php14,500 at GigaHertz Computers (North Wing, Mall of Asia). When my brother and I went in, I asked them if the tag price was also applicable to credit cards and the guy who manned the station said yes.


While we were discussing about the price drops and the narrow pricing gaps between iPods (iPod Nano 2nd gen was about Php12k+), I jokingly mentioned to him why they increased the 30 GB’s price from somewhere in the Php13,000+ to Php14,500. The guy ask when was the last time I saw that price on their display and I replied about a week or two ago since I often pass by their alley everytime I visit MoA.

He then explained that because of the strict enforcement of the new Price Tag Law by the Department of Trade and Industry, they were forced to put in the credit card price and only when customers would insist about the pricing would they lower it down to the cash price.

In effect, consumers will be defaulted into paying the more expensive card price instead of the lower cash price, unless of course if they insist for it.

Abe is the founder and Editor-in-Chief of YugaTech. You Can follow him on Twitter @abeolandres.

You may also like...

14 Responses

  1. Miguel says:

    That’s not tragic. Those are wants, not needs. And people who really want those stuff know better not to buy from mall shops…

  2. yuga says:

    But Migs, it also applies to your in-the-corner shops. I always buy my PC parts and stuff from PC Express and everytime I wanted to use my credit card, they would add a 6% charge which I think isn’t fair to consumers who prefer to use their credit cards instead of buying cash.

    Sabi ko nga, “sayang ang Miles!”

  3. noel says:

    I used to work sa HSBC and was able to work at the credit card department for a few years as IT support and the policy talaga for credit cards is “NO SURCHARGE”.

    If you see a credit card POS machine, check the bank who supplied that machine. That is their acquiring bank which is the bank that are affiliated with. You can report them to that bank.

  4. Miguel says:

    Oh I wasn’t referring to any kind of shop… was thinking of the “gray market” :)

  5. wyzemoro says:

    this is one of the reason why my dad won’t get a credit card because of this hidden fee or excessive surcharges and aside from credit card fraud all over the net.

  6. Cash or card price, I always ask retailers if they give discounts. Yes, even at the mall–at least for expensive stuff like electronics. And guess what, they usually do give discounts, especially if it’s a cash purchase.

  7. Dave Starr says:

    One of the advantages to me of being an American and living in the Philippines is that, in most cases, merchants were honest and posted the cash and the credit price. I don’t care to spend more for using a credit card, but at least I was readily able to see what it would cost me … option A or option B.

    In the US it has been illegal 9in most cases) for many years to charge separate cash and credit card prices. So, guess what everyone pays … yep, the price marked up for the credit card surcharge. It’s sad that the Philippine government saw fit to add this burden to the consumer.

    Yes it’s true, even a Kano can ask for a discount, but the point is with the old system a consumer knew what he or she was paying for … now, it’s any one’s guess.

    In defense of the merchant it really does cost more to sell with credit card payment rather than cask … at least 5 or 6% more. So the extra cost has to come from somewhere. Now, instead of the cost coming from the customer who chose to use the credit card option the charge will just be paid by all consumers, card or cash. The only other outcome is that more merchants may chose not to accept credit cards and that again will hurt those who need something right away and don’t have enough notes in their wallet.

    To me the law seems both anti-consumer and anti-business.

  8. jerry says:

    Credit card purchases from the consumer do not incur surcharges unless you are late in payments.
    It’s a different thing in commercial establishments, for appliances and gadget stores, they are charged 6% at least for using the credit card facility to sell products. With margins falling up to 5% only, it would be ridiculous to shoulder the 6% surcharge. They would rather not sell the product at all. For supermarkets the credit card companies only charge around 1-3% so there is more possibilities of this being absorbed by the establishment. For restaurants, they usually have a higher margin so that is why they are able to absorb those costs.

  9. merchant boy says:

    i really don’t understand why the said law has fooled everyone into thinking it’s better to have a single pricing scheme rather than 2. As a merchant I can state for a fact that credit card companies do get 5% – 6% of our gross cc sales. and i think it’s unfair to burden cash payers just so credit card companies get more money.(by luring everyone to pay by credit card) I believe that true consumer empowerment is when you give them the most options. I hope some of you realize how obviously that this so called law was passed with the help of lobbyists working for the banks.

  10. Destron says:

    I already posted this comment on another blog but I see it’s relevant so here goes:

    If one were to complain about the price tag as the “credit card” price and the cash price as the “discount”, it’s still a dilemma that the if we use cash price for the price tag and then have to explain to the customer why we have to jack up the price with a surcharge if they were to use their card. The terms for running a card machine is that there should be no difference in price between paying in card and using a card. Before you go and celebrate shouting “Sabi na nga ba!”, this logic entails that one should no longer expect a discount. If there is a discount, the store must be throwing a sale and that they still have a reasonably good profit margin to do so.

    Once merchants have a card machine, they realize a 5% commission fee and tax are deducted from gross amount. They can’t rely on the old price scheme they are using and now have to accommodate this commission fee and tax. It stands to reason that if the rule of law and contract is to be followed, then the consumer is charged the same price regardless of nature of transaction.

    You would probably think, “Oh, just spread that extra charge around with cash payers to break even.” That would be the most ignorant remark one will ever have made. You can’t tell how many people will pay in cash and what would happen if everybody started using credit cards?

    Don’t even say “Suck it up!” Like the VAT, the money has to come from somewhere in order to pay said fee. Eventually, people will have to learn it is part of operating cost and shouldn’t berate the merchant for it.

    Hell, I’m still wondering if merchants are entitled to receive a official receipt for this commission fee. So far, I only get the certificate form for the taxes and a summary form for the charges. I’ve yet to receive an official receipt for those commission fees and they sure pile up.

    I don’t know how much power merchants have in lobbying for lower commission fees but I sure would like to see that extra charge for taxes be shouldered by the bank. And now the argument becomes a link in a chain…

  11. Jeff says:

    If options are best for consumers I think it is best for merchants as well. They can have the option to not have credit card payments in their stores and lose sales form credit card users or not. But having different prices is almost like discriminating against credit card users.

  12. Ian says:

    We should be careful on govt. pronouncements, especially pronouncements that on the surface seem good to us.

    We should learn that Govt. Policies are influenced by big moneyed lobby groups. (Yes, that includes the US Govt.)

    The Price Tag Law was really instigated by the Credit Card Companies and the Banks. They get Billions and Billions from the fees they charge from the merchants. It would seem like they are fighting for our interests but they are really salivating on the Billions they get on those fees.

    The banks also discrimate against small merchants charging them 6% while the big chains could haggle to lower their fees to 3%. Soon the small merchants would whittle away and what would remain are the Big 3 Dept. Stores much like the Big 3 Gas Companies who have the same price but we all know we are being screwed by them.

    If a dictator were to rule the country and order a ban on giving discounts to cash purchases, we would think that we are getting a good deal but what we don’t know is that we are being screwed by the banks since those fees will be inputed to the cost of the merchandise.

    If I am patient enough to save up for my purchases, I would like to have that fee from the bank deducted from my purchase please.

  1. August 22, 2014

    […] Reference: http://www.yugatech.com/daily-dose/when-the-price-tag-law-becomes-anti-consumer/ […]

Leave a Reply

Your email address will not be published. Required fields are marked *