Grab adding processing fee for GrabPay top-ups with Visa credit cards

Grab has announced that from 1 June 2021, all GrabPay wallet top-ups made with Visa credit cards will be subject to a S$1 processing fee. This will be waived for top-ups of at least S$400 in a single transaction. 

Other Grab transactions made with Visa credit cards (e.g rides, food) will not be subject to the fee.

Why is this happening?

Back in February 2020, Visa announced plans to adjust its interchange fees (the fee merchants pay for accepting cards) across the board in the USA. While some merchants would see lower fees, fees would increase for those processing card-not-present transactions (i.e e-commerce merchants, ridehailing apps). 

In the words of Visa:

Visa has been pursuing a strategy of increasing acceptance of its cards in new markets, which often translates into incentivizing consumers to use payment cards for purchases they ordinarily wouldn’t—which can mean recurring necessities like rent and groceries that conventional wisdom says you shouldn’t charge to a credit card, large dollar amount purchases you might want to write a check for, and small transactions you would typically pay for with pocket change.

To finance those incentives, something has to give, and that something is e-commerce. Bloomberg reported traditional Visa cards would incur a fee of US$1.99 (up from US$1.90) on a US$100 card-not-present transaction, while premium Visa cards would incur a fee of US$2.60 (up from US$2.50).

These changes were put on hold due to the COVID-19 outbreak, but with the economy recovering, the fees will be introduced from April 2021. Now, all the reports I can find online refer only to the US market, but my guess is there must be some knock-on effect for rates in Singapore too, hence Grab’s decision. 

Does this matter?

In a sense, not really. 

Ever since 4 mpd on GrabPay top-ups with the Citi Rewards Visa went bye-bye in July last year, there’s no reason you should be using a Visa credit card to top-up your balance. As it stands, the only cards I know to earn rewards for GrabPay top-ups are American Express, which are unaffected by this change.

• AMEX True Cashback: 1.5% cashback
• AMEX Singapore Airlines Business Card: 1.8 HighFlyer points per S$1 (0.9 mpd)

Therefore, no one’s really going to mourn this loss. In any case, GrabPay users can continue to enjoy fee-free top-ups with:

• American Express credit cards
• Mastercard credit cards
• All debit cards
• Transfers from other GrabPay users
• Bank account top-ups via PayNow VPA or linked UOB accounts

Remember, it’s now possible to transfer your GrabPay wallet balance to your bank account, provided the source of the funds was a debit card or bank account top-up. Funds which were topped up from a credit card cannot be transferred out. 

Conclusion

A S$1 processing fee for GrabPay top-ups, while annoying, is easy enough to avoid. Just be careful that you don’t have an automatic GrabPay top-up arrangement with a Visa card as the default payment method and you’ll be fine. 

The bigger question is how other online merchants will deal with the Visa interchange hike. I can’t see Lazada, Qoo10 et al. imposing a similar fee, much less Singapore Airlines (well, not again at least), so my guess is they’ll grin and bear it. We’ll see.