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Credit Card Transactions In India – Nowadays, in the busy routine of people, credit card has proved itself as the easiest way of money transfer. A credit card is like an assistant that helps in managing our finances.

Why do merchant charges extra for credit card payments in India?

When you go to a store or any other place or shop to buy things, you have two options. The first option is that you pay the merchant of the shopkeeper using the cash you have in your wallet, and the second option is that you pay for your items using your credit card. Paying using cash has no problem to it as you have to pay the exact amount to the shop keeper without pay extra for tax or other things. However, if you pay using credit cards the merchant sometimes charges 2 percent extra.

Now you must be wondering why he charges 2 percent extra when you pay using your credit card. The merchants have to pay the bank for the services they provide to the shopkeeper or the merchant. These charges account for 2 percent of the total payments made by the people. Sometimes these charges can vary, and it depends on what type of bank the merchant is using. If the bank charges the merchant 1percent or 2 percent, he will charge the extra payments from the customers accordingly. The merchant will charge lesser payments if it is affiliated with a good bank.

Online shopping are Amazon

However, you should not be worried if you are shopping using online websites. Some websites for online shopping are Amazon, Flip kart, Olx, big Bazar, and reliance. When you shop using these websites, you do not have to pay extra for merchant charges. But how is that possible? How do they differentiate from local shops in India? Are they giving a benefit to the people of India? Let me explain this to you by comparing the local markets and the online markets.

In India, the local market is as big as the online market, and both these markets have an equal share of customers. Prices of products are managed by the ministry of finance in India. The ministry of finance is responsible for regulating the prices of objects sold in the local markets. Each year they can increase or decrease the amount for the products. The amount does not mean the factory price. The factory price is fixed by the industries. The government only changes the tax on the products, which can increase or decrease the price. Moreover, the government does not apply any sort of tax on the customers when they pay using cash. They also do not apply tax when you pay using a credit card.

You buy an object worth 1000 rupees

Merchants don’t prefer their customers to pay with credit cards. When you go shopping and when it is time to check out, you want to pay using your credit card, but the shop o owner will decline that offer. They will tell you about a nearby bank and tell you to pay in cash. Most shopkeepers do not even accept credit card payments. Although this 2 percent may seem very little, it is not. If you buy an object worth 1000 rupees, you will have to pay an extra amount of 10 rupees or 20 rupees, depending on the percentage. However, if you purchase objects that work 20 thousand or 30 thousand, the payments can go up to 200 rupees or 300 rupees. These are good enough charges for the local Indians. and they try their best to prevent this.

While shopping online, the prices of objects include the merchant charges too. For example, if you purchase a bottle of perfume online, its market price would be 10 dollars, but the overall amount would be 10.2 dollars. The extra 0.2 dollars is the charge. For a higher price, they give alternatives to compensate for that price. An alternative is providing free delivery. Merchants have to pay the bank for their services, and so they cut extra charged from the customer to save themselves from the extra charges. It is prohibited by the government of India and should not be carried out by the merchants.

 What to do when merchants charge 2 percent extra?

In these situations, you do not have to react to them but inform them about the law. If you are purchasing online from websites such as Amazon or Flipkart, you will identify if the seller is charging 2 percent extra or not. What you have to do is to go and check the prices on other websites.

Moreover, every product has an original price that is provided by the company. You can go to the genuine website of those companies and see if the price is more or not. If the price is more, you will tell the online seller that he should reduce the price and he is going against the law. If he agrees, then well and good, but if he does not agree, you will have to file a complaint to RBI. Copy the IP address and the name of the seller and send a complaint to RBI.

Most of the time when you pay using credit cards, the shopkeeper would force you to pay the extra 2 percent. He might also tell you a fake story that these are the conditions of the bank, but you do not have to trust him. First of all, you have to argue with him that this is against the law and he is breaking the law. Moreover, you can also tell him that for breaking this law the individual can take legal action against him.  

The RBI looks into issues related to extra merchant charges

The RBI looks into issues related to extra merchant charges, so you have to complain to RBI. RBI has given clear instructions to banks and requested them to break any ties they have with those merchants that charge 2 percent extra on their products. However, even after the instructions from the government, the merchants do not agree to this and keep on charging extra from their customers.

You can also complain to banks. So what you have to do is that if you face any such unfortunate event at a retail store, take a picture of their bill or their shop. If you cannot do that, note down their address and take a picture of that shop. The next step is to go and visit the bank. Before going to the bank, make sure you print everything and sort it out in the form of a document file. You have to include your picture and a copy of your ID card so that the bank can identify the customer. When you reach the bank, there will be a complaint box or a desk that deals with these issues. Then, you will put forward your complaint. You might also write a complaint statement so that it becomes more powerful.

Alternatives to save yourself from merchant charges:

The first alternative is to use Visa and MasterCard services. Many banks of India are affiliated with visas and MasterCard, and so you should use these credit cards. They are beneficial when you want to reduce your charges by 2 percent. However, they will not help to eliminate the charges. If you use other credit card companies, you might have to pay more than 2 percent merchant charges. These charges are different for every credit card company.

The reason behind this is that Visa and MasterCard are very common in India and are used by almost everyone. Locals, government officials, politicians, businessmen, and most merchants use Visa and MasterCard. If you have a credit card from another company, and the merchant has a credit card of visa and MasterCard, you will have to pay more than 2 percent as it usually costs more when you send money to a different bank. So it is best to stick to MasterCard and visa to prevent any extra charges.

Moreover, these credit card companies have flexible and easy-to-understand policies. These companies try their best to provide the customers with the best possible rates and the least tax rates, so it is preferred you carry out all your transactions using a visa or master card. Moreover, they also have an active complaints department. So if the merchants commit any fraud with you, you can contact these banks, and they will try their best to retrieve your lost money.

PayPal provides a quick transfer of money

PayPal is used by almost every other person in India. PayPal provides a quick transfer of money. They acted as an acquirer, but now they have expanded their services even more. Paypal is completely online, and its facilities are now available for the local people as well as the merchants. Moreover, PayPal is much cheaper than credit cards as it is online. You just have to register yourself with PayPal. this means that once you set up an account with PayPal, you will be allowed to use it. They also do not charge extra first-time fees. Moreover, merchants also use PayPal for a reason that they have lesser or no charges.

When you pay for an item inside the country, you will have to transfer the exact payment and no other extra charges. As a result, merchants do not charge their customers extra and keep a fixed price. You have to keep one thing in mind, and that is that if you purchase anything using PayPal outside India, you will be charged an extra fee by the merchants.  

Moreover, after you check the original price of the object, you can bargain with your seller. You will have to unleash your negotiation skills here as some merchants can be stubborn. If you think that the price is high, you should consult with the merchant and tell him to give you any sort of discount. You have to try to bring the price as much as possible, but if that is not possible.

India has a huge market

At least bring the price down at a level where it compensates the extra charges applied by the merchants. You will be somewhat successful in this as India has a huge market and they try their best to sell all their products. However, if the merchant feels the deal is unfair he won’t agree. If he says this, you can inform him about the law and tell him that he is committing a crime. On complaining the bank will cut off ties with the merchants and suspend their credit card permanently. This might score you a great deal.

You can also split your payment procedure with the merchant. I’ll explain this using an example. Suppose the merchant demands 10 thousand rupees which are around 700 dollars, you can tell the merchant to reduce the price and in return, you will pay half money by cash and half by credit card. So this will help in reducing the price as the merchants will not charge you only 1 percent extra.  

Moreover, another solution completely removing merchant charges is to pay the seller in cash. If you pay the total amount in cash, you can tell the merchant to reduce the price of the object to the original. This way, neither you will have to bear the extra costs and nor will the merchant bear extra costs.

Finalize a deal with your merchant

India is a big country and ultimately, the population is very high there. Few merchants can’t fulfill the demands of the people. So as a result, there are millions of merchants that are there in the Indian market and they provide their services to their public. So if you cannot finalize a deal with your merchant, there are always other merchants that can treat you better and provide you with better rates. So instead of arguing with them, just move on to other merchants. Online markets such as Flipkart and OLX have thousands of merchants. 

Most people recommend using OLX and Flipkart as these provide much cheaper rates than others.

If for some reason you always shop from a particular website, and you’re not able to get good rates from the merchants, it is always best to look into other websites. Sometimes merchants provide their services on a particular website and so you might not be able to even deal with them if you do not visit those websites. So you should keep your options open so that you could find better rates.

How to complain to RBI?

Complaining to RBI is the quickest way to ask for help. There are two ways to complain. The first one is to go to the RBI office and the other is to complain using their online website. Forgoing to their office, you should take the proofs with you. You must also take documents that can prove your identity. The proofs will consist of the name of the merchant as well as the location of his shop. You may also take the fraudulent bill with you.

If you have to complain online, you will provide the same document. For that, you have to scan them onto your computer and send it to them along with your information.

Indian banks that deal with merchant issues:

There are a specific group of banks that deal with merchant issues. These banks provide merchants with services. If you face any such issues from merchants, you are advised to visit the banks. Not only the locals, but the merchants are also allowed to visit the bank and tell them about the issues they face with the public. Most of the time, government of India advises customers to visit the banks personally instead of just calling them and complaining, the more complaints, the faster will the issue of extra charges be solved.

Firstly, you should contact the ICICI bank in India. They are spread throughout the country and have over more than 2000 complaint centers. They acquire a portfolio of almost 30 % of the Indian market. It also provides better security and finance management than other banks Moreover, their staff is super helpful. The other bank you should consult is the Axis bank in India. You can go to the bank personally or also contact them. They can be contacted using email or by calling them.

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