Is it necessary to pay 2% extra charge on credit card payment? Know the strict rules of RBI and banks, where and how to complain if shopkeepers ask for it

Often while shopping in small markets, electronics shops, jewelery showrooms or wholesalers, when you take out your credit card, the shopkeeper immediately says –“Sir, if you pay by card, there will be an extra charge of 2% or 2.5%.”

In simple and clear words, charging this additional fee (Credit Card Surcharge) from customers is completely illegal and against the rules. The Reserve Bank of India (RBI) and the card networks (Visa, Mastercard, RuPay) have clear guidelines that no merchant can pass the burden of service charges paid to the bank or payment gateway directly onto the customer’s pocket.

The main reason behind the shopkeeper asking for this extra money MDR (Merchant Discount Rate) It happens.

• What is MDR: When a merchant installs a POS (POS/swipe machine) at his shop, banks and card networks charge a fixed commission on each swipe from the merchant in exchange for processing that payment infrastructure, which is called MDR.

• This fee on credit cards usually ranges from 1% to 2.2%.

• According to the rules, this fee Cost of Doing Business Which has to be borne by the shopkeeper from his profits or expenses.

• However, many small merchants add this charge directly to the customer’s final bill or insist for cash payment to save their 2% margin.

RBI has taken a strong stance on this practice by issuing circulars from time to time:

• RBI circular rule: As per RBI instructions, charging any additional surcharge from the customer over and above the bill amount by the merchants is unfair trade practice.

• Merchant Agreement: When a shopkeeper installs a swipe machine at his place, he signs a contract with the bank. The main condition of this agreement is that it will not discriminate in price between the customer paying by card and the customer paying in cash nor will it charge the MDR from the customer.

• If a shopkeeper is caught doing this, the bank has the full right to immediately blacklist and confiscate his swipe machine (POS Terminal).

This question arises in the minds of many consumers that if it is illegal, then why 1% or 2% surcharge is deducted on swiping the card at petrol pump or IRCTC (train ticket):

• Petrol Pump and Utility Bill: Petroleum and government services have been kept under special exemption as dealers’ margins in these sectors are very low (0.5% to 1%).

• However, most banks on their credit cards 1% Fuel Surcharge Waiver Due to which this amount is refunded in the next month’s statement.

• But any kind of surcharge on general retail shops, clothing, mobile stores or restaurants is completely prohibited.

If a merchant is asking for an extra 2% charge on credit card payments, you can take these 4 effective steps:

• 1. Enter that charge separately in the fixed bill: If you are forced to pay, ask the shopkeeper to issue a tax invoice by clearly writing ‘2% Credit Card Surcharge’ or ‘Convenience Fee’ on the bill. (Most shopkeepers are afraid to give it in writing because they know it is illegal).

• 2. Contact the card issuing bank: After payment is made, call the customer care of your credit card bank or lodge a complaint on the app. Provide them with the merchant name, Terminal ID (TID) entered on the swipe machine and proof of bill. The bank issues a charge sheet against that merchant and refunds your extra deducted money.

• 3. Complaint on National Consumer Helpline (NCH): you toll-free number 1915 You can lodge a complaint of unfair trade practice against that trader by calling or on the ‘Consumer Grievance’ portal.

• 4. Use of alternative digital payments: If you want to avoid the argument, you can pay through UPI, debit card or other means which do not attract any extra charges.