charging of transaction fee on the use of credit card is not only unhealty but cheating with the customers as well. most of us are unaware that these charges are to be borne by the seller only. credit card is a fascilty offered by various companies to which the sellers are also the member and as a mean to promote their sale volume even they offer the service. Perhaps there is no law to control this practice and even the instituions offering credit cards are casual in their approach in such cases. An strict control and vigil plus awareness programe should help.
If the consumer pays by credit/debit card or cheque, the money is in the records and the merchants have to pay tax and there is no way they can avoid for a transaction paid by credit/debit card or cheque. If the consumer pays it by cash, the merchants have the flexibility to manipulate the exact amount they show for that transaction. This was the merchant can avoid paying tax completely or partially. Obviously the merchant cannot say this hidden agenda to the consumer. So they indirectly make the consumer pay by cash by saying that there will be additional some % charge if paid by credit/debit card or cheque.
Here in New Zealand most corner shops would say "No credit card below 10$". Bread costs 99 cents or maximum 1.2 $ on these shops.
Petrol pumps sell that bread for 3$ or sometimes 4$ and therefore have no problem paying the 30 cents transaction fees.
I don't think that the seller has to pay the transaction fee. I remember very clearly that Electronics For You magazine used to charge 10 rupees for out of station cheques. It was clearly printed in the subscription form in the last page of the magazine.
RE:Not sure about Indian laws but outside shops refuse C redit Cards for small purchases
by Smart Fool on Nov 23, 2007 02:21 PM Permalink
Even in india it is the same. Only thing is that they don't display a board saying any amount less than that they don't accept cards. I have seen a few who have displayed boards saying cards accepted only for amounts Rs. 500 and above etc. For instance Big Bazaar has clearly displayed a board which says that for electronics, appliances and few items they will charge 1% extra if paid by card. Only food items, clothes and other consumables no extra charge if paid by card.
Though this practice is not there in many outlets, some small shops do insist for the fee ranging from 2.5 to 3%. However, leave apart private merchants, even in govt outlets like Petrol pumps, Railway booking etc., they go on leving extra charge for making payment through credit cards. This is very strange and something should be done to overcome this extra burden over cardholders.
I have experienced this. Merchants say that they have to pay rent for the EDC machine and/or processing fee. More than the customer, it is merchants who put their foot down, demand & finally win.
Every credit card (CC) holder should be aware of CHARGE BACK; the only protection for customers.
What is 'charge back' and how does it work?
If a customer is unhappy with a purchase thru CC, s/he can demand for 'charge back' so that bank will reverse the amount billed on CC. That is, bank will cancel that purchase & will not pay the amount to merchant. Net result is customer need not pay for that faulty product or unsatisfactory purchase. The charge back can be claimed within 180 days of the purchase date. Does any bank educate customers of this fact?
When the MOTO (Mail Order / Telephone Order; a.k.a MOPO-Mail or Phone Order) was in practice without the CVV number, a merchant charged my brother for an unwanted holiday package. After noticing the charge in the statement we demanded the bank for charge back successfully.
Next time when merchants demand a 2% transaction fee to be paid by me, I would like to ask them to bill it separately and collect a receipt for the same. Later go for charge back.
Last but not least, I do not think banks are bothered as long as they get the transaction fee; whether it is paid by the merchant or the customer.
Merchants in India have still not acknowledged that use of credit card helps in increasing their sale. They pass on the entire transaction charge to the consumer, which in reality should be paid by them. Also these merchants don't want credit cards to become routine way of purchase, since for such purchases tax evasion is impossible. The preferred mode of transaction remains cash, which allows flexibility of all kind of tax savings.
Well, the Govt. intends to reduce cash transactions and encourage plastic card. This would help to curb black money and tax evasion. It is often seen that the policies of the Govt. are rather retrograde and not progressive. Take for example, transaction charges in the Bank. If you are maintaining Current Account, and intends to draw cash more than Rs.50,000/- Income Tax Dept. instructed Banks to levy and collect Bank Tax and credit to Govt.Account. This step would discourage to open Bank Accounts. Further, I have been using credit card and while booking railway tickets, additional charge is levied by the railways; these are required to be eliminated. Who hears common man's voice. On the other Members of Parliament,MLAs when they receive enormous amounts by way of allowances, they are all exempt from Income Tax. A strange logic! The cmmon man's genuine grievance shall never be heard and redressed. The Consumer Councils are also like civil courts drag on and justice delayed and no one has patience to pursue. Enforcement of rule of law if not done average citizen in the counrty would always feel frustrated.
