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Should You Pay Extra for Using Card While Purchasing?

We all have gone through the trauma where we are forced by the merchant to pay extra if we are using the card for transaction for purchase of their goods. This charge can be as high as 2%.

RBI’s notifications on POS transactions through card Debit cards has been issued and can be quoted as an authority as given below:

As per point 4 of the RBI notification dated September 25th, 2013, it is unjustifiable on the merchant’s part to charge customers for buying goods and services as it is not permissible as per the agreement between the merchant and the bank which issued the POS (Point of sale) terminal or card swipe machine to the merchant. Such practices call for the banks to terminate their relationship with such merchants.

Credit cards

Clause 4.18 of RBI’s November 2007 report of “Review of Payment and Settlement Systems in India 2006 – 2007,

“In case of Credit Cards and Debit Cards there is no visible charge on the customer for use of cards at merchant establishments. Charges are levied directly on customers only at few locations like petrol stations etc. and for cash withdrawal at ATMs. In all other cases, charges levied by banks have been for the credit availed (beyond the due date). In credit cards and debit cards the interchange fees – the charges paid by the merchant are an integral part of the pricing structure of credit and debit card transactions. As this fee is levied on the merchant establishment, there is differential cost for the merchant for payment received by cards or cash. This serves as a disincentive for merchants to encourage payments by cards. This was observed as the reason why the use of cards for purchase of valuable items and goods continue to be discouraged by the merchants; if payments are made by cards the interchange fee is recovered from the customer. This is because, in case of larger value purchases, the merchants find it unremunerative to absorb this interchange fee.”


This 2% rule, however, is relaxed for railway tickets and at some petrol pumps, says G V Giddappa, general secretary at Credit Card Holders' Association. In case a petrol pump has a tieup with a card, the amount is charged back into the card, a banker adds.

Action to be Undertaken if Merchant insists for extra charges

While speaking to a banker, they confirmed that if matter is reported to them; they may then blacklist the outlets and remove their terminals and suggests reporting matter to a consumer forum.

So, this is an easy way to save money provided you know the exact procedure and then you can confront them with an authority that extra charges should not be applied to a client for using the card.

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