Merchants can’t charge 2% extra on Debit Card Payments – Says RBI

POSTED BY Jagoinvestor ON September 26, 2013 COMMENTS (401)

Have you ever faced this situation, when you were making payment through your debit card or credit card?

“Sir How are you making payment ?

Debit Card or Cash ?”


“Sir, There will be 2% extra charges if you pay by Debit Card ? ”

“Why extra charges ? I use it at every place and no one charges any thing extra ? ”

“Sorry Sir, this is our Policy. You can take out the CASH from the nearby ATM if you want to save that extra charges”

“Huh ! .. &^#$^&*J#^&&#%$&*N”

You often face the above situation, when you buy things like jewelry, Laptops, Mobile phones etc. I faced this 2-3 times myself, but could argue well with the shopkeeper, because I knew this is just a tactic used by shopkeepers to save on the charges they need to pay from their own pocket. Hence I never paid that extra 2% or just left the shop.

Merchants Cant charge extra on debit card payments

Merchants cant charge any extra charges on Debit Card Payment – say RBI

Now yesterday, RBI has openly cracked down on this unfair trade practice and issued a notification saying that Shop Merchants can not charge any extra charges from customers, if payment is done through Debit Card. Below is the exact wordings from RBI Notification

4. Levying fees on debit card transactions by merchants – There are instances where merchant establishments levy fee as a percentage of the transaction value as charges on customers who are making payments for purchase of goods and services through debit cards. Such fee are not justifiable and are not permissible as per the bilateral agreement between the acquiring bank and the merchants and therefore calls for termination of the relationship of the bank with such establishments.

Why Shopkeepers Charge extra 2% on Debit Card payments ?

When you swipe your debit/credit card  for purchasing some item, the merchant has to pay some fees (1%-2%) to the Bank or the rental fees for the swipe machine. The charges goes out of their own pocket, as the cost of running the business and convenience of taking the payments (more customers will come, if card payment is there). If its a small payment like Rs 500 or Rs 1000, then its a charge of Rs 10 or Rs 20, which is fine. But when it becomes a payment of lets say Rs 30,000 (imagine buying laptop or iPad), then its around Rs 300-600 and to save that big charges, they discourage debit/credit card payment.

They often ask customers to pay by CASH and point them to nearby ATM. Almost always, customers could not refuse, because they have already made the buying decision, and dont want to argue for the small charge, and a lot of times, they finally believe that may be its not illegal, and finally give the CASH even if they do not want, or just allow the merchants to charge additional 2% charges.

But, as per RBI, its not a fair practice, because merchants already have agreed in the agreement with the card swiping machine bank that they will not charge anything extra from the customers. Here is one example of asking for 2% extra fees by some Geeta Ramani on rediff website

My worst experience was when I intended to purchase a Tata Sky card worth Rs 1000. The shopkeeper said 2.5% = 25 rupees extra. I told him — you give 10, I will give 15 rupees. He spoke quite roughly — hum kyon den? I told him it was because he was supposed to pay the bank, not I, and that I was doing him a favour and not the other way round. He said he did not earn anything from the transaction. Anyway, I did not give in. I didn’t purchase from him and purchased the same from Indiaplaza instead online without any transaction fee

What you should do, if Shopkeeper does not agree ?

RBI has clearly asked all the banks to break their relationship with those merchants who are practicing this. So, when any merchant asks you for extra 2% charges and even after the debate they do not agree, you can complain to the RBI about this and also complain to the bank. Each Bank has a “Merchant Services” section on their website and when you mail them or complain in personal to their branch, mention that you want to complain about Merchant Services. Example for ICICI bank is here and Axis Bank is here. But

When you take this step, at-least some merchants might fear the consequences and oblige!, but now the problem is how many people will go to this extra mile . It would require some time and effort from your end.

So next time you are asked to pay extra 2% on debit card payment, you can clearly tell them about this RBI notification. If required better take the print out of the notification and keep it with you in your wallet or as an image in your smartphone.

Have you ever faced a situation where you were asked to pay extra 2% charges on debit card payments and were pointed to a near by ATM, and what did you do in that situation, please share !

401 replies on this article “Merchants can’t charge 2% extra on Debit Card Payments – Says RBI”

  1. ramdas says:

    do you know any information about sbi gift card charges … today a customer at my shop paid 121.00 rs using sbi gift card and after swiping the card on my bob provided machine i gave the customer copy with 121.00 printed on it with the bill after a few minutes customer started arguing with me that 145.00 was deducted from his card and i have charged extra 20 plus amount to customer and even after i showed her my details payment received report from my swipe machine she was not willing to accept that i have not charged any thing extra from her … and in fact she showed me sms from sbi that 145 was deducted from her balance … so under this circumstance what i am supposed to do as neither it was my fault or hers but for no reason we had heated argument

    1. You need to tell them that its the SBI charge .

    2. Dev Gilani says:

      What about credit card transactions?

      1. Jagoinvestor says:

        I think even there they cant

  2. Vikram says:

    hi my name is Vikram, from Chennai.. i left my bike in Suzuki service center (Pramaan suzuki, Adambakkam) 3 days before. I Said that i will pay by Debit card only, as i dnt have cash in hand.. tey accepted on taking bike for suzuki.. but now tey asking 2% charge for Debit card, and that 2% needs to be paid in cash… What shall i do, how shall i complaint abt this…

    1. You need to complain it with merchant (the card machine company like ICICI or HDFC)

  3. Vicky says:

    Sir nice information.Can we not approach local police? I have faced this problem in Wardha. Most of the shopkeepers..tyre shop, jwellers and many shopkeepers are srraightway and shamelessly asking for 2% charges on purchase.
    All banks and media is requested to give a wide publicity to create awareness among public ,local news papers would be the most ideal.

    1. No you cant complain this to police , its not a criminal offence, but the breach of contract the merchants have with the swipe card company. You need to complain with them!

  4. Alisha says:

    The SBI website doesn’t seem to have provisions for the merchant services. The how to complain against a merchant in this situation?

    1. I am not very clear on the details of this.

  5. KGSVenkat says:

    I think with Rupay cards where Mastercard and Visa are not involved we can reduce charges for all

  6. rajeev says:

    i did not really wanted to ask it personally but Mr Manish can u tell me what will the traders do if their margin is around 3-4% do they have to give thier half earning to the bank and 30% of the leftover 2% to the govt as income tax. So you are not coming out with a solution and suggesting we shouldn’t adapt to POS system. Ok now the govt has been pressing on cashless , so you think we arel the dumbest trader in the market. Basically you are killing the business and doing no good.

    1. I have no idea on that, but if you are using the swipe machine card, then you cant charge 2% , its not as per law.

  7. Vipin gujjar says:

    Hey my college also charge 2%tax on swipe debit card .I want to knw this is right or wrong incase of college .

  8. And what About Online Portals LIC is charging heavily on Payment of Premium via Credit Card / Debit Cards, Should RBI not request Govt Enterprises to leave those charges.

    1. This rule from RBI does not talk about online websites. It only talks about swipe machine

  9. Dr. Sivaramakrishnan says:

    I have faced such a situation. Example when MRP is 15000, they willing to give for 13500, by cash and 14000 by card what will you do?

    These arguments you can make only in shopping malls where they gonna give u the product only on MRP tag. So please don’t argue whenever the shopkeeper is gonna give you any product which is lesser than MRP rate, at a cost price.
    If they are willing for card without service charge go for it, else take some effort got to atm get money.

    1. Thanks for your comment Dr. Sivaramakrishnan

  10. Manish says:

    Appreciate what is written. Some points from my side. 1) No shopkeeper myself included would want to take burden of excess cash, so as much as the customers the swipe machine facility is convenient for us as well, ask bank remove 2% charges and give 1% cash back to the customer (Paytm and other credit cards have been giving it) who will then pay by cash 2) Most of the business today run on margin less than 1% (this is called money rotation business, where the turnover is high and more footfalls at the shop allows cross selling of other products), now consider giving 2% again to the bank, have we opened a social welfare club. 3) Many people are worried about the margins that we make (without knowing the exact picture), well then get it yourself from the manufacturer at the minimum order qty., maintain stock, employ people, consider over heads, face customers who has default credits and so on and so forth. 4) Retailers and wholesalers are pretty much the backbone of the economy, the number of employment involved, the tax payers, etc.

    Now think as an employer, all your employees will now have salaries credited by a system which will charge 2% extra to the company. Now, which company will not pass on that charge in a way or two to the employees.

    1. Thanks for your comment Manish

  11. Uday says:

    Merchants can’t charge extra but see the overheads for one swipe transaction
    The commison from 1-2% on the card type and then there is a phone call made
    Then you have to do settlement of all the transaction which is one more call so ₹2.4 gone
    Many banks keep 1800 now they are charged as premium nos hence call rate is ₹5
    Some time we have to connect 2-3 times wrong pin no connection etc so that another 1-3 calls extra so how much have u lost.

    1. Thanks for your comment Uday

  12. Nandkishor Kore says:

    Is there any common number to make a complaint against Merchant… How come we come to know that which banks swife machine merchant is using…

    1. No , there is no common number as such !

  13. Sunil says:

    Could you please let me know “How to & To Whom” we can complaint about this issue (Charging excess on total bill)

    1. I am doing an article on this very soon !

  14. PRASHANT S says:

    It is time to reform banking system also.for the consumer & merchant.

    1. Thanks for your comment PRASHANT S

  15. Bharat says:

    I think this is also done by traders who are interested in hiding sales of their goods. Card transactions leave a trail, and they’d have to end up paying tax on these purchases. Cash trail is SO much easier to hide!

  16. Vinodh C K says:

    Actually we had purchased some Hindware products today and they had charged Rs 440 as the service charges. Though the machine was lent by SBI bank

    1. You need to complain this to SBI in that case

      1. Vinodh C K says:

        Thank you sir I will follow sir

  17. Saurabh says:

    How will we know which Bank Swipe Machine the merchant is using. and where to complain i.e which bank?

    1. You need to see that on the machine

  18. Deepak says:

    It would be nice if someone could please post the link to the complaint portal. I have also been charged 2% very recently. I have the photos of the bill and the swipe machine slip thus showing the difference.

    1. There is no complaint portal as such !

  19. Ooiseeroop says:

    I am of the opinion that the RIB circular under reference is practically useless since it talks about only what a seller is not expected to do without clearly putting any certain and easy to access remedy in the event of otherwise happening. In fact I believe that after the recent upheaval in our currency system every electronic transfer should be made free of all charges. Electronic transfer also benefits the concerned banks by saving either logistics cost of supplying cash to the ATMs or by reducing work load of the counter. And the country and the banks actually reaps benefits of documentary credit.

    1. Thanks for your comment Ooiseeroop

  20. SatyanBajaj says:

    I am a merchant and I do not charge the extra 2%. However when people come with the street mentality that we small retailers earn more and should give them discount of upto 70%, we cannot do it. Our profit margin is a mere 30% less 6% for VAT. We lose out on business in cash and card both due to bad decisions by govt. and mainly due to online retailers.
    Once again as a small retailer we do not charge an extra 2%. All I ask is don’t expect discounts from us.

    1. I think thats Fair Enough .

    2. Shabbir Aamil says:

      Absolutely right. Same set of purchasers when they go to MALL, they don’t bargain but when they come to shopkeepers they bargain. Point is simple we wont ask for debit / credit charges but then u dont bargain

    3. Srk says:

      Good. Even I mentioned the same in my message

    4. Jitin Chadha says:

      We have started a petition asking RBi and PMO to permanently waive-off this charge.
      Please sign this to support fight against blackmoney as well as saving the interest of small shopowners

  21. Katon says:

    How do we file a complaint against a merchant.. what is the procedure. if anyone can provide an insight, please.

  22. Balaji says:

    I had similar problem when I try to purchase bike in a show room. Total cost is around Rs. 105000. When I try to pay through card the show room person asked me 2% extra on the cost for card payment. I have explained him clearly but he is keep on saying same info. I said without charges I am ok otherwise I don’t want to buy now Thanks for your service and left the place.

    1. Hey Balaji

      Thanks for sharing your experience with all of us. It was a great learning.


  23. Santosh says:


    I think time has come to withdraw all types of transaction charges from card payment.

    Actually all swap machines are linked with ONLY Current Accounts of merchants and bank never pay any kind of interest to that accounts. Think, if bank receives big amount payment via card, it will be a interest free money to bank.

    On this platform I request to RBI or Indian Government that, If they really want to minimize Black money, they should encourage Plastic money, Also request that make it maditary to make all transaction over 5000 through bank. Then and then only this mission will be successful.

    Thank You

    1. Thanks for sharing that Santosh

  24. Hari krishna says:

    If RBI SAYS THAT merchant should not charge service charges..

    1. I suggest you give this suggestion to bank

  25. Suneel says:

    I’m an NRI…usually around the world payment by debit card will not be charged anything extra. But we need to pay 2% or whatever extra for paying by credit card….by doing so, it encourages customer to do cashless transaction which also will eradicate black money.

    But when we come to india, we are either forced to pay extra charges or to encourage black money with cash transactions……Can’t the govn. & banks give a thought on this?……may be as a service it should be fixed for Rs.30 or something on any amount of transaction…….I guess it’ll be beneficial to all. At the same time why should a merchant pay to bank from his pocket….it’s totally unfair!

    1. Hi Suneel

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  26. K.P.Arvind says:

    Even Hospitals charge this extra amount… and i am a victim

    1. Thanks for your comment K.P.Arvind

  27. Kapil Choudhari says:

    RBI Regulation is useless, shopkeepers who have low margin cant afford 2%..
    Only Banks are getting richer.. who are earning profits on every swipe.
    Surcharges or convenience fees should be waved off.. from merchants and from costumers as well…

    1. Thanks for your comment Kapil Choudhari

  28. Devesh Yadav says:

    What about merchants like some restaurants not accepting card payments below ₹200? They accept only cash below ₹200.

    1. Thats their own rule .

  29. kalyan says:

    if purchase of 300000rupees shop keeper should pay 3000 to 6000. it is not small amount.

    1. Thanks for your comment kalyan

  30. Pritam Vaidya says:

    Its actually not a problem with customer or merchant,its between bank policies
    For retailor many banks provide low rate for transaction fee if you keep some amount as a deposite with the bank(may be 1 lac or more) these deposites wont get any intrest.But this feature helps you to receive payments without accepting charges,If your business has low margins then better not to get merchant POS but remember that merchant POS can give you additional business

    For Customer
    To increase the use of plastic money rbi keeps low rate of transaction fee for debit card payments,for credit card as discussed earlier no clearity is provided may be because its still luxury to use credit card or customer with credit card gets additional benifit of converting the amount to emi, the rewards points are nothing but customer retention programme for credit card company, not a single company will think to stop the programme and pass the benifit to retailor as they themselves have cut throat competition

    Every coins has two sides

    1. Thanks for sharing that Pritam Vaidya

  31. Jeetu says:

    These Media ppl dont have any work so they say any bull shit to create NEWS

    COME ON MEDIA PPL PLS PAY 2% bank charge to each and every merchant

    Come on pay to us on MRP we wont charge u transation charges

    Now speak wht u wan to say

    1. Thanks for your comment Jeetu

  32. Mohammed Abdul mateen says:

    I would like to know is it legal for 2 wheeler show room to charge 2 % on purchase of new vehicle with debit card.

  33. Rajat says:

    It’s not limited just to merchants. I have paid this 2% extra in hospitals as well. It’s Gangotri Hospital, BTM Layout Bangalore. They ask this 2% with so much confidence that we don’t even doubt it’s illegal.

    1. Thanks for your comment Rajat

  34. Jayakumar V says:

    If this is illegal, how can IRCTC charge transaction fee? They charge 1.8% and it is Indian Railways which is Govt. again.

    1. Its online on website. THe articles talks about the Swipe machine !

    2. Sagar says:

      It is online payment gateway line etc.. Basically, it is third party payment integration which provides payment facility online. So they charge around 2% extra as Handling charges because they provide the facility of online authentication, authorization and payment.

  35. Nitin says:

    The RBI guideline point #4, talks about the debit cards, what about the credit cards ?
    Can we show the same document as a proof, even if we are paying by credit cards ?

    1. There is nothing said about credit cards

      1. Deva says:

        for sweeping card and online payment using same gateway only …..

  36. Aditya says:

    In many businesses the profit margin is 2-3%, so if 2% will be taken by the bank, is not this unfair for shopkeepers? why will they adopt debit credit card, and to top it indian government does not bear the transaction charge for railway ticketing, we customers have to!!

    1. Yea, so then these shopkeepers should not adopt debit cards

  37. Arun Shrivastava says:

    These people are digging their own grave. The customers will ultimately shift to bigger shops or online shops.

    1. Thanks for your comment Arun Shrivastava

  38. HR Panwari says:

    Will RBI please clear its stand on Payment Gateway charges being charged by PG companies ? This is the main reason why transactions through Debit / Credit cards on POS are legging behind.

    1. Thanks for your comment HR Panwari

  39. Parneet saluja says:

    I’m sorry, but why should merchants pay from their pockets here now? We have an electronics business and we charge extra if the payments made from card, cos believe me when I say we hardly earn a 100-200 rs from each product and if the products are luxury ones, the profit of a merchant from that is 1000-2000 rs. U might also want to know, that on tata sky recharge or any such for that matter, how much does a merchant earn? It’s just 30 bucks. So if u buy a 1000 rs recharge do u know how much does a merchant earn!? I’m sure u can do ur calculation. Even banks earn a good amount of margins on transaction done by us, we also pay them a good amount of monthly return.. what a merchant gets is a paper thin margin..
    Even online booking system charges u extra as a convinience fee u know how much it charges us to maintain the stock so that customers can see it in real!? I’m sorry, it’s just legit for us to charge that 2% extra, we aren’t doing social service after making such a huge investment. If u still don’t want to be charges that extra % , may I suggest u stop asking for so much discounts. Fair enough!?

    1. Thanks for your comment Parneet saluja

    2. DJ says:


      If you cant make margin please close down the business. You are not expected to do any charity services. Just by threatening the customer with 2% of charges the business guys run shadow economy which is a major threat to the Nation. You add 2% in your product cost and accept only cards. Thats the genuine business

    3. Alok says:

      Mr saluja let me inform you that in this digital world wherein people are moving to cashless transaction. So on swipping a debit or credit the merchant cannot charge the customer since it’s a facility for doing business all let me tell you major portion of the commission goes to visa,master rcard etc not the bank. Again I’m repeating if someone charges the customer on swipping, the client can go to the bank or banking ombudsman for being charged extra, basis which a merchant can be banned by bank for wrong practices.

  40. Anshuman Borah says:

    Why don’t RBI puts a mandate on every bank to provide phone based app or website links where the picture of the slips, photo of the shopkeeper and shop can be uploaded. Pay with 2% and then show the slip as proof. At times it’s risky to even debate with some shopkeepers.

    1. Thanks for your comment Anshuman Borah

  41. Aditya says:

    Can you sue the merchant for this?
    Or the merchant can say ,” customer was informed and he still paid”

    1. You cant sue them for this, You can only complain about this with VISA or MASTERCARD

  42. Jayan Thekkedath says:

    I am a shop keeper based in kochi , Kerala . I do accept it as an act of misconduct by charging extra amount for debit and credit card transactions. But why can’t the government reward/encourage the Merchant by asking the bank to cancel the transaction charges ? It will help all merchants who are trying to compete in this unhealthy competitive market which is flooded by black money . Even customers can opt for RTGS/NEFT / IMPs channels also for payments . Please do accept the fact that apart from card charges there is service tax + cess and also account maintaince charges , machine charges etc .

    1. Jayan Thekkedath says:

      I also like to add, request the card issuing companies /banks to cancel the reward point scheme , which itself is a negative promotional activity. If you all remember initially the value of reward point was 1 rupees for every 100 . Now most banks have reduced the value to 25 paisa. Just for reference, for transaction in petrol pump the card holder (except few cobranded cards) have to shed out fuel surcharges , why is it so ?? . I am sure any retailer will not charge or claim transaction charges if banks avoid these transaction charges . If there is not transaction charges being levied by the bank and any merchant claims any charges can be treated as illegal and not as Unfair

    2. Thanks for sharing that Jayan Thekkedath

  43. murty says:

    the RBI should give some method for reporting.Like Railways are doing now.This will help customers.Also customers can stop buying from these shops.Now no mono ply for any shop.

    1. Thanks for sharing that murty

  44. retailers voice says:

    if salaried person come to know that fro m his salary 2 % will be deucted from salary to transfer of amount . to his salary a/c. what will his response.? Boss today wolrd is full of competition Business is much difficulit and u want the bank earn 2% eaisly by swap machine. people do business for just 2% how can they share thier profit with bank . RBI Regulation is useless , all shopkeeper (who have low margin) cant afford 2 %

    1. Thanks for sharing that retailers voice

    2. Hari says:

      As a retailer i support this

    3. DJ says:

      Mr. Voice

      It is as like as, “it is my hard earned money why should I pay 20% – 30% as tax to Govt”? Understand one thing… If the volume of transaction increases, the charges per transaction will come down. And all will become accountable and taxable.

    4. Against Liar Retailers says:

      In response to retailer’s voice… there is huge competition, agreed. Bank does not earn 2% easily. Any merchants or shopkeepers who are saying profit margin is 2% or 3% is biggest lie in itself. such retails are biggest source of black money people and looters. No business in india is having 2 or 3% and i dont want any justification from such retailers. Retailers are already earning alot. Bank or any body do not get easy money. There are crores or rupees already invested behind such infrastructure . It has to be borne by people. Nothing comes easy or free in this world. But everyone wants to loot Banks for easy. RBI regulation is most useful. Retailer’s do not have that much of brain or IQ to decide whether useless or useful because all are busy in looting people, bank and country. It is high time, it must be made compulsory for all shop and retailers to use only POS and BAN currency notes. and Yes charges must be borne by Retailers for sake for business and convenience. If you are find tough to do business, start cutting down on your exorbitant lifestyles. Start treating customers with respect and it starts with Payment system. And Dont talk non-sense on something on which you dont have at all any idea.

    5. Amit says:

      If you are so worried about that 2% then stop doing the business. All the salaried class which works abroad and has to transfer amount back to india, has to pay the remittance charges everytime the money is sent. So you shall too pay if there is RBI guideline.

  45. Rybin Clement says:

    When I have used my debit card to pay amount for my Scooter service, I have faced a situation to pay 1.5% additional amount ASR TVS,PAMMAL MAIN ROAD, NORTH CHENNAI who is using HDFC POS. Especially in this situation when people are struggling to get Rs100 notes and had to wait hours in queue at ATMs.
    I have told them that RBI have already given notification to all Banks NOT to charge any additional amount from the customer by merchant. As per RBI, its not a fair practice, because merchants already have agreed in the agreement with the card swiping machine bank that they will not charge anything extra from the customers.
    But the Service Manager, A. Aravindan, told me that there would be lot of notifications, but we do not care. And he made me pay 1.5% service charge. I had to pay 1.5% extra, as I have only old Rs.500 and Rs.1000 notes were there with me.
    Even earlier when I bought the scooter from the same shop, they made me pay the whole amount in cash.
    I consider this as a very bad practice and these Merchants are violating all the notifications from the government. Please take necessary action against them.

    1. Rybin Clement says:

      The above message is the complaint I have filed in HDFC BANK customer complaints page.

    2. Thanks for sharing that Rybin Clement

  46. Bhaskar J says:

    How can we know about fuel surcharges, is there any minimum or maximum charges(% ) for transactions using swiping machines. Some received Rs.11.50/- and few say it is 2%. I want to know know how it is calculated. RBI should education citizens of such charges.

    1. We are not clear on that ourself. You need to do google search for that

    2. Ganapathy Subramaniam says:

      Fuel Surchage is a flat ₹10(+service tax of₹1.50@15%)=₹11.50 for a transaction. It is the same amount you pay extra no matter how much of fuel you buy. Most of the Credit Cards and some Debit Cards waive the surcharge if you buy fuel for more than ₹400. We all know that is not possible for two wheeler users even if they fill the tank fully. The SMS alert you receive immediately after the transaction will not talk about this ₹11.50. But you can check your statement to see that every time you have used a card in the petrol bunk, another ₹11.50 would have been deducted as surcharge.

  47. Anish says:

    The Notification is silent on Credit card, it just says that the transaction fees wrt debit card transactions cannot be charged.

  48. Raghu says:

    Thanks for this article. Though your article says ‘Debit and Credit Card’, RBI talks about only Debit card.
    Could you please clarify if this applies to debit only or credit too.

    1. While I have mentioned credit cards , Its only in the initial part to make people understand about the issue. However the rule is only for debit card, I have clearly mentioned that

  49. KARTHICK says:

    Shops? The Tamil Nadu government does this on their Online electricity board payment site. They charge like 1.5% on payments done by debit and credit cards.

    1. The RBI circular does not say anything about the websites. It only talks about the swipe machine payments

  50. Viral says:

    I can name 10 shops on the tip of my tongue who will/ has charged me 2.5% extra they always prefer dealing in cash and send me to ATM
    Alfa at Irla
    Shops in Lokhandwala
    Heera panna market almost all shops will have machine but will direct you to ATM

    1. Thanks for sharing that Viral

      1. Jeevan says:

        Hi Manish,

        Thanks for this info. I wasn’t aware that the charges I have paid at so many places were wrongly taken from me. To name a few, I purchased my two wheeler last year in Bangalore, I paid 2% charges on purchase through my credit card, also every time I get it serviced, they have been charging me 2% Levying Fees for transacting with plastic money.

        Bangalore Wheels in Rajajinagar
        Panache Enterprises in Indiranagar, Marathahalli

        Almost every showroom, service center levy these charges on customers.

        1. Thanks for your comment Jeevan

  51. kunal says:

    Other Charges
    Delivery Charges [INR]: Included
    Payment Gateway Charges: applicable on the total transaction amount as per the following schedule
    Credit Card (any) : 2% + Service Tax
    Debit Card (any) : Transaction Amount below Rs.2000/- : 0.75% + Service Tax
    Transaction Amount above Rs.2000/- : 1% + Service Tax
    (Charges would be deducted directly from the paying Account)

    THE ABOVE IS FROM a Government Website SPMCIL!!!.

    The government should show the way not ask others to stop while they still continue to charge the same.

    1. The article was about the merchant swiping machine .. .

      1. rajesh says:

        why merchant has to spend 2% out of his profit?

        1. Its not sharing of profits, but the charge for using the card machine, Its not mandatory. You can choose to not use it

  52. Debasish says:

    I went to purchase a two wheeler from Honda Showroom (PGL Honda) ,Bhubaneswar ,Orissa..they have asked me 2 % extra..
    Any Showroom I have tried also they asked me same thing…

    1. Yes, its a rampant thing ..

    2. Mihir says:

      They ask because the prices they set are not considered with card fess in mind …. which is generally 2 % . In many cases the margin are very tight for merchant’s to just give card service for free …. specially for general store merchant’s in which margin is really low …….example the tata sky recahrge thing the shopkeeper have like hardly 3–% margin so obviously he want give in for your convenience. But in case of resturant and clothes shopping it doent matter much as bill is in 1000s and margin is high so they can lure customers with this kind of facilities. So just except to increase a little price in general thing for compensation of carf fees

  53. V says:

    Most local businesses owned by powerful politicians. Policy police usually torture small people like you and me.
    This restaurant just asked people to get out

  54. Tomy Joseph says:

    I purchased pertrol from Deepak Motors, Dilshad Garden for Rs. 250/- and paid by Debit Card. They entered the same amount and later I got message Rs. 11.5 has been debited from my account. I’m using Axis Bank Debit Card.
    When I contacted the Bank, they said that it is their agreement with the vendor. Aynyway, the customer should raise voice against this unhealthy practice.

    1. Thanks for sharing that Tomy Joseph

    2. Big Daddy says:

      You should read about terms and conditions of your card from the issuer bank site.. the extra 11.50 is called as Fuel Surcharge. It will always be levied when you use card.

    3. Abinash says:

      This is called as fuel surcharge, it is already there in your card agreement. The bank will charge the amount on your fuel purchase. IT can be waved by the slab amount purchased specified in the card agreement.

  55. Shobhit says:

    I swiped my card at a petrol pump the reciept that he gave me was for 1900 which was my bill, but i received a text of 1954. I dont know why this happened ?

    1. Jagoinvestor Admin says:

      Hi Shobhit

      That’s because of fuel surcharge.

  56. Aruna says:

    Hi Manish,
    one question around a small deviation from this article. I am being asked to make a minimum purchase of ₹100 sometimes or ₹200 at some places to swipe my debit card instead of cash. Is this by rule. Then why the difference in amount between merchants?
    Thank you

    1. Hi Aruna

      There is no specific rule like this, its more of a merchant decision to put this rule

      1. Parth says:

        Is it Fair or Legal for merchant to do so ? I also faced this situation.

          1. Eddie says:

            If it is Illegal …then what can one do to bring the erring shops to put a stop to this…specially after demonetisation when there is a serious cash crunch

            1. You need to complain about this with the issuer. While there are steps to do this, most of the people dont have stamina to continue the struggle for long.

  57. HarishKumar says:

    There is merchant called Chandigarh Clinical Lab at SCO 43, Sec 31 D Chandigarh providing lab services for blood test,pathological test etc.
    Inspite of RBI guidelines,this merchant charges 2% extra on debit card transactions while swiping at his end for any payment.
    His banker is State Bank of Patiala,Chandigarh though exact branch is not known as it is not printed on the transaction slip.
    May I get guideline as to whom and how to approach for complaint against this merchant for violating RBI guidelines.

    1. You can complain with the issuing bank (the debit card machine issuer) or with VISA or Mastercard.

  58. Manoj says:

    On 25th Sep, 2016 (Sunday ) I Visited to “Lenevo” Shop at S-107,2nd Floor, V3S Mall, Laxmi Nagar Delhi-110092. to purchase Laptop. I decided to purchase and discussed about payment made by credit card. The Shopkeepers told, “If I pay by credit card, 2% extra would be charged from you”. I argued and explained him about RBI notification but he didn’t agree to avoid the levy. So I denied the purchasing from the shop. But after the RBI guideline not to charge extra from customer, why shopkeepers demand extra from customers. why bank should not take action against such shopkeepers.

    1. Thanks for sharing your experience. While the rule is on paper, still most of the shopkeepers still do that because no one complains about this and let this go ..

      1. Manoj says:

        Thank you sir for taking review of this matter. Whereas question of complain regarding such incident, hope several people are complaining but due law of RBI couldn’t execute strictly on ground level by the concern authority in spite of the complain, shopkeepers are doing their own and rule become in vain only as black and white on paper. Ultimately customers suffer.


        1. Thanks for your comment Manoj

  59. Ravindra says:

    Hi Team,

    Yesterday I purchanged TVS Excel from TVS showroom in Guntur, Andhra Pradesh. For paying I am using AXIS bank credit card but they charged 3 % extra cost for total my bill. I don’t know why they charged.

    But I used in Bangalore for below rs.100 also they don’t charge anything……

    Please look at once as a common man already we paid so many TAXES but again retailers are charged like that where we can go …… So many places they are done like that only

    1. Yea, its not fair and you should complain about this with the bank

  60. Roshni says:

    Yday I had given my Honda Activa for servicing near Rohini, Delhi. When I was paying the bill of Rs 3300 through debit card, I was asked to pay 2 percent extra. I asked them why should I pay 2 percent extra, they said its their policy. I said okay and I paid. The same thing happened with me when I had gone to purchase Honda Activa from Dhruvdesh Honda,Bangalore. There I did not buy and instead I sent them legal notice for which they replied that their machine was not working that’s why they could not do the payment. This time I kept quiet only because I wanted proof that they do charge 2 percent extra. They have yet not given me the bill and asked me to wait for 3 days to generate bill as my vehicle is of karnataka registration. I am just waiting for the bill so that I can send them legal notice. Whatever the case may be, they ask you proof. So guys I would say that you pay 2 percent and then file a complaint with your bank and consumer complaint.

    1. Jagoinvestor Admin says:

      Hey Roshni

      Thanks for sharing your experience with all of us. It was a great learning.


  61. Livingstone says:

    I don’t think there is any point in this law. I tried complaining to HDFC and they say any discounts that the merchant might have given will not be applicable for credit card payments. Unnecessarily I fought with the merchant and told my wife that this is how we’ll be able to change India by standing against malpractices. I just feel like a fool now. My humble advice to anyone who is thinking of complaining to the merchant services department: PLEASE DON’T. IT IS A WASTE OF TIME. Below I’ll describe the entire story and paste a copy of HDFC’s response.

    Copy of the mail I sent to HDFC

    I’d like to bring to your attention that the merchant Kubera Motors located at
    #1506, 19th Main, 11th Cross
    1 Sector,
    HSR Layout,
    Karnataka 560034
    is expecting me to pay extra 2% for a payment of Rs 30,000. This happened on Sep 11th around 6:30 pm when me and my wife went to buy a Scooty Zest in Kubera Motors.

    The sales person I had spoken with was a Mr. Kulkarni. When I wanted to speak with some of their superiors, the cashier said that the manager was not available and she didn’t know his contact number. I had specifically told them that this is against RBI mandate and their banks are liable to terminate their relationship with them if they are aware of this malpractice. The cashier’s reply was that this is how business is done. Also Mr. Kulkarni mentioned that all dealers in the auto sector follow this and it is very common. When I had asked them to give this to me in writing they declined.

    I had come across the RBI notification that says that merchants are not allowed to charge the customers for card transactions.
    Kindly take necessary action against this defaulting merchant and also keep me in loop regarding the action that was taken against this defaulting merchant.

    Kindly acknowledge this mail.

    S E Livingstone

    Copy of HDFC Response:
    Dear Customer,

    Thank you for writing to us.

    This is with reference to your e-mail regarding your HDFC Bank International credit card account.
    We understand the inconvenience caused to you at the Merchant Establishment and wish to inform that the merchants ( except for petrol pumps, railways and certain Govt establishments) are not authorized to levy any additional charges over and above the value of the transaction. However, we would like to explain that the cash discount applicable on the merchandise for cash payments may not be extended for credit card transactions.

    We take this opportunity to clarify that the prices mentioned in the display at the Merchant Establishment is the cash discounted price and the same may not be applicable for the transactions done using credit card. In the view of the above, an additional levy on the cash price ( quoted by the merchant ) is billed on the card account when the payment mode is through a credit card . This additional charge with the transaction value gets billed as single transaction.

    1. Anup says:

      What you did was correct and I appreciate you took your time to raise the complaint. Please keep it up. The only thing you missed out here was that this the act is applicable only for debit card transactions and not credit card. However, Thanks for raising your voice. We need people like you.

  62. Kapil says:

    What if the merchant profit in the business is not even 1-1.5%? There are various businesses in the country having such a low margin, for e.g. Paints Cement, Truck Tyres, etc. If the RBI can issue such a circular to ban the merchants from taking these charges, why not ask for the disposal of these charges from the merchant end as well (esp for Dedit Card Holders, where in there is no actual liability on the bank),

    1. Logic is fine , but what if there is law for this ?

    2. Shailender says:

      The banks should stop levying charges on card transactions so that many more small & big vendors adopt swiping machines which in turn eases the problem of cash flow in conditions like these as on 15/11/2016 where there is a serious cash crunch after the ban of currency notes of 500 & 1000.

  63. Krishan says:

    I purchased some jewellery item from skj jewellers, Vaishali nagar, jaipur and compelled payment in cash instead through debit/credit card saying 2% extra. I was guided for neatest ATM for cash withdrawal. Can I lodge complaint against jeweller. Guide me.

    1. If you have proof of this, yes you can

  64. Arun says:

    Its good move and today it’s actually done officially. So no more 2% additional charge and can swipe our cards and no need to carry cash amounts. Good move

    1. Glad to know that Arun ..

  65. Gagan says:

    IRCTC is also passing on this transaction fee to customers which is in direct violation of this RBI circular. I have raised complaint against this with both IRCTC and HDFC Bank and awaiting their response.

    1. The article talks about the SWIPE MACHINE which is there in shops, Not online transaction.

  66. Aniruddh says:

    Then why Torrent Power Ltd -TPL pass on the payment gateway charges on the customers for the electricity bill payment that we do online!!

    1. This article talks about the swipe machine in physical stores. Not online

  67. Ashok says:

    Yesterday i visited Planet Honda & Dhruvdesh Honda show rooms to inquire about scooter. in both the show rooms i asked about card swiping facility he told 2% extra charge both for debit and credit cards. i explained him about RBI notification but straightaway he regretted the booking itself.

    1. You can complain to VISA about this.

      1. Pratik says:

        What will do visa ?

  68. Dipak says:

    Its easy for RBI to say… Think about a business like gold, where margin its self is about 4 to 5 % and if bank charges 2%,


    1. Thanks for your comment Dipak

  69. sharad says:

    Check It out

    ********************** Gas Bill
    Gas bill
    Net Banking: “ZERO” Convenience Fee
    Credit Card: Convenience fee of 0.85% of the Transaction Value plus service tax as applicable.

    (Subject to minimum Rs. 5 plus service tax as applicable)
    Debit Card: Convenience fee of 0.75% of the Transaction Value for amount below Rs. 2000/- plus Service Tax as applicable.

    Convenience fee of 0.90% of the Transaction Value for amount above Rs. 2000/- plus Service Tax as applicable.

    (Subject to minimum Rs. 5 plus service tax as applicable)
    Cash Card/ Wallets: Convenience fee of 0.90% of the Transaction Value plus service tax as applicable.

    (Subject to minimum Rs. 5 plus service tax as applicable)

    ********************** Electricity Bill

    Steps to perform Quick Online Payment
    1. Fill all the necessary details in Payment Detail and submit the request.
    2. Verify Payment Detail and process further by clicking on the Pay Now button.
    3. Quick Online Pay screen will be redirected to Payment Gateway.
    4. After completion of payment, Payment Acknowledgement will be displayed.
    5. You may take a print-out of the payment acknowledgement by clicking on the Save & Print button.
    6. Transaction processing fees for Net Banking is Nil for one transaction per bill. For more than one transaction per bill, processing charges of Rs. 2.50 per transaction shall be debited to the consumers.
    7. Wallets and other EBPP channels is Nil for one transaction per bill.For more than one transaction per bill, processing charges of Rs. 2.50 per transaction shall be debited to the consumers.
    8. Transaction processing fees for Debit Cards is 0.75% of Transaction amount for value upto Rs. 2000.00/- Plus Applicable Service Tax, 1.00% of Transaction amount for value above Rs. 2000.00/- Plus Applicable Service Tax [Subject to Min of Rs. 5.00/- Plus Applicable Service Tax] will be charged to the customer.
    9. Transaction processing fees for Credit Cards is 1.00% of Transaction amount Plus Applicable Service Tax [Subject to Min of Rs. 5.00/- Plus Applicable Service Tax] will be charged to the customer.

    1. The article is about the swipe machine where you swipe it physcially !

  70. Muktheswer says:

    I had petrol in Tarnaka Signal(Bharath Petrol) of Hyderabad for 2500 on HDFC Credit Card in my Car. When I checked my statement in online, they have charged amount of 2571.5

    1. You need to check why they have done that !

  71. Sreekant says:

    The RBI notification is silent on the use of Credit Card. It specifically only mentions Debit Cards. Are there any different guidelines for Credit Card.

    1. I am not aware of any credit card guidelines!

  72. Sushma says:


    Is there any charge applicable for automobile purchase through Credit card. If yes, may i know the charges.

    1. There is no extra charges !

  73. shantanu says:

    in today’s world of competition business are running at very less margin.
    as the example given of tata sky recharge.
    the profit margin is around 1.8 to 2.0%
    now if he let u to swipe your card for free that means he have to pay 2.15% to bank..
    similarly on big items like tyres (profit margin 2-3%) electronics etc have high amount involved but percentage of margin is less. so what is wrong in charging the cost which is incurred for providing you the facility.

    1. Thanks for your comment shantanu

    2. Aroop says:

      I don’t know where did you get this margin information. But, as per my knowledge it’s much higher than you have mentioned.

  74. MohammadZaki says:

    Hello Manish,

    Thank you soo much for this valuable information.

    Even I have gone throught this this situation before but was unable to locate where to reach out. Coudl you pleae tell me, if we need to file compalint about the merchant. Where and how should we proceed.

    1. You can do it with VISA or MASTERCARD … Search on net about it

  75. Abhijeet says:

    Hi, My question : Do we need to pay 2% additional when we swipe credit card. Thanks, Abhijeet

    1. Merchants can ask for it, it depends on you if you want to honour it or not !

  76. Deepak says:

    This is welcome in the interest of customers. This practice is quite common in shops in tier 2 and tier 3 cities and smaller towns. There are even some online agents who charge as convenience fee for every transaction. IRCTC charges about 1.5 to 2% per ticket, and other similar websites charge a constant figure per movie ticket. Shouldn’t RBI set rules for online agents as well?

  77. Janak says:

    I faced a similar issue with Efficient Electrical Services in Secunderabad. I swiped for 31K and they asked me to pay 2% extra, which I refused and walked out of the shop, They later called me back and did not take the additional charge. I could do this because I read about the RBI guideline on the same. Awareness among customers is very important. Retailers thrive on our ignorance.

    1. Ranjith says:

      Retailers dont steel any thing from you
      They will be charged 1% + Service Tax for D Card and 1.8 to 2% + ST For C Card.
      So, The Retailers who sell products with small profit cant afford to bare the charges

    2. Hey Janak

      Thanks for sharing your experience with all of us. It was a great learning.


  78. John says:

    How can we complaint about a merchant to RBI? Also can we report this to Income Tax Dept.?
    If we can, then what all docs will we need for both authorities?

    1. You need to complain to merchant from where the swipe card was taken, like if its ICICI bank swipe card, you need to complain to them about it.

  79. Vishal says:

    I complained at ICICI bank portal provided in your article. But they are not even bothering to reply.
    Could you please let me know what shud I do next.

    1. You should now complain it to banking ombudsman

  80. Ankit says:

    You all have submitted that merchant should not take any surcharge but u all hove not studied that is a merchant is selling a laptop or sony bravia or any other product suppose the product cost is 70000/- and the profit after selling the product he is earning 1500/- Rs or we can say 2000/- the customer swaped the card for amount rs 70000/- then then the amount of 68600 will be credit to the merchant current a/c

    Now u all tell me if he does not charge the swapping charges then he has to bear from his pocket he is earning 2000/-he give the 1400/-Rs swapping charges to the bank then what is the benefit of getting the swapping machine

    1. Nitin says:

      The profit is usually more than what you mentioned. Secondly, if the seller doesn’t want to pay the charges to bank, then he can either do any of the below 3.
      1) remove card payment option (means lesser customers)
      2) Deal with the banks
      3) Fight for reduced charges. The comman man cannot do this for merchants! And merchants can do this better anyways!

      1. ranjith says:

        Its easy to talk
        you should experience this situation
        the bank takes money from the retailers and give reward points and gifts to you
        so you will talk this and even more

    2. Thanks for your comment Ankit

  81. Ayan says:

    I had an experience of 2% extra charges for purchasing a K7 antivirus CD in Berhampore West Benagal. The name of the shop was System Edge.Although the total amount was 1050 INR only,but they asked for 2% extra for the same and ultimately I had to purchase the CD by cash because I had not any other option at that moment .At that time I was not sure that whether the extra charges is legal or its a malpractice of retailer.

    1. Thanks for your comment Ayan

  82. Karthik says:

    Now, no surcharge on card, digital payments

  83. Pushpinder says:

    Hello.. Very informative article Sir
    Right Now, I am getting My Car serviced. Here it is written that ON CARD PAYMENTS,SURCHARGE WILL BE CHARGED EXTRA”.
    And I am ready to fight against this malpractice, while payment settlement.
    If they dont agree, Will escalate the issue with Bank and Maruti Top management.
    Will share My further experience.

  84. Tejas says:

    Can anyone tell where to register complaint against merchants charging 2% on cards?

  85. VijaySrinivas says:

    I was charged by HDFC Bank when I used my card to buy petrol. I was charged Rs. 11.40 each time I filled for Rs. 200. Then I used Canara Bank Card, and the same thing happened. All these didnt happen immediately, but the surcharges were reflected after 10-15 days.
    Why dont anybody understand, that by using card, it enhances the safety of both the costumer as well as the retailer, since the customer doesnt have to carry too much cash, and the retailer doesnt have to risk being robbed. Also, most important, there is no question of FAKE NOTES when cards are used.

    1. Venkatachalam says:

      Surcharge is allowed for fuel transactions and certain transactions like Railway booking, airlines , etc., But these surcharges will be available in the Fees and charges list of your cardholder manual. In any other place if they are asking for the Extra amount you can protest.

  86. sanjana says:

    Can a online retailer pass the 2-3% credit card or debit fee to the consumer? and what if it is under the pretext of a “convenience/ service” fee?
    thank you

    1. Yes, they can ! ..

      The article you are reading is for merchants having the machine, where you SWIPE physically !

      1. Sanjana says:

        Got you, thank you so much for your response.

  87. HeenaPawar says:

    Worst…..They don’t even add the charged amount in the bill as fee or ST or any other component so that we are aware. This definitely points that this fee is an offline collection so that they don’t shed any money from their pocket.

    Might well they should not have a swiping machine to save that charges…And see stuffs nothing but less than Rs.500..hahahaha

    Secondly, RBI should regulate a dial call number like we have for Cops, to complain about the shopkeeper immediately, so that this practice is effectively followed.

    We have all sorts of TAX added to a bill when we go for shopping and Lunch. Service tax, service charge, swaccha bharath Abiyan tax, etc.. If the Merchant has got into business, he must have known that he is liable to pay a lot more tax than the individual who is salaried, and he agreed to all the rules before starting a business. So why is it that a common man has to suffer on paying these taxes.

    Eating food in a restaurants is any ways expensive and with all possible taxes and charges, we land up paying almost 20% to 30% extra over the bill amount. And then if you use your card, u will have to go walking home, coz u have payed double the amount of food you ate.

    We need realistic rules and awareness on them so that we abide to it.

    1. Hi HeenaPawar

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


    2. resham says:

      Good that they don’t include that charge in your bill… Only because of this you are getting good strong proof that they charged u for that 2% (which was other than product charge). Show the bill of merchant and your credit card receipt to bank. Which will clearly show 2%was charged extra. Bank can’t refuse to take action then.

  88. AbhySunny says:

    Does this include credit card too ?

    1. Venkatachalam says:

      Even if it is Credit card Service providers like Master Card/VISA/Amex has certain rules such as the merchant should not discriminate between card and cash payments. You just mail the level 2 Customer care officer of the acquiring bank( The machine you have swiped and received the Charge slip). If they refuse to take action then you can contact the Master card/VISA via card issuing Bank. Even though it is not necessary for Issuing Bank to forward your concern to Card service provider like Mastercard or VISA you can force them by threatening to break the relationship with the bank.

      If the Card acquiring( POS machine bank) and issuing bank(your card bank) are same then the issue can be easily dealt as both are same and they can not direct you anywhere. Here why i am asking you to skip level 1 because in the first level they do not know anything related to this and contacting customer care will also not help.

  89. Ram says:

    I had the same situation at JSP Honda Hyderabad service center.
    H.No. 7-14, Sri Krishna Devaraya Colony, Opp. BPCl Petrol Pump, Madinaguda, Hyderabad, Telangana 500050

    They billed copy was 6581 rs. They asked me to pay in cash or on card I had to pay 2% extra. I argued with a lady cashier and told her to bill me only the exact amount on the bill. On my surprise she took my card and billed me with 2% extra money i.e 6680 rs on my ICICI debit card.
    And the service is bad as usual.

    1. Thanks for your comment Ram

      1. narayan says:

        Each and every two wheeler showroms in Hyderabad are charging additional 2% for card swiping.

        1. Thanks for your comment narayan

  90. Sharekhan says:

    Sagar Hospitals in Bangalore always charge 1.5% extra for card usage. If we tell about the RBI notification, they dint seems to carr a dime. Publishing notifications is of no use. There should be proper follow up and action taken against offenders. While the government wants to curtail usage of black money, these organizations promote them. How do we file a complaint with the RBI on this. There should an be easier way to bring such malpractices to the notice of the authorities.

  91. Abhinav says:

    Please share a direct link to this pdf of the RBI directive. Thanks

  92. kamal says:

    I am dealing automobile business and margins are just 4%. in this competitive business, first customers bargain for best price then offer credit card for payment. it is highly impossible to a dealer to accept card payment with out service charges. We repeatedly asked our bankers to waive off these charges. but there is no use. As said RBI must take forward this issue seriously and encourage card using.

    1. Thanks for sharing that kamal

  93. Balasubramaniam says:

    Hi, I have doubt. If merchants cannot levy extra charges for credit/debit card transaction, does it include online websites like IRCTC to impose a percentage of transaction as banking charges while we book tickets? Please clarify.

    1. Thats not clear. We are sure that for debit card, the merchants who ask you to swipe the card cant ask for extra !

      1. Daksesh says:

        Not only IRCTC but other public sector companies like Mahavitaran(Maharastra Satate Electricity Distribution Co. Ltd.) is also charging against debit card payment which exceeds Rs500. Please provide mail id of person to whom it can be reported.

        1. This rule is applicable for merchants who are charging extra offline when a customer swipes the debit card.

  94. Venkata says:

    Is this applicable for credit card transactions also? Or still 2% extra can be levied on credit card transactions?

    1. There is no clarity on that. The notification only talks about debit card

      1. Kabir says:

        Merchants who follow this practice, do so for both Credit and Debit Cards. Irrespective of the type of card/issuing bank.
        I have made it a habit of not arguing and paying the “card payment fee” silently.
        This gives us (consumer) a valid proof of malpractice against the merchant.
        Always, note the Partner bank mentioned on top of the counter foil and write the Bank’s customer service an email mentioning the Payment Due, Actual charge and TID (Transaction ID). This gets the ball rolling.
        Happy shopping.

        1. Hi Kabir

          HAve you actually complained on this yourself and does it work ?

  95. purushottam says:

    If merchant pay monthly rent or charges for swipe machine . Why bank charge extra 1-2% per transaction ?

    1. Thats how the business model is .

  96. Chidambaram says:


    I have faced such situation and paid the money they asked. I was not at all aware of this. Recently I have purchase Pulsar 180 in AMBA bajaj, bangalore. The cost of bike was almost 92K including extra fittings, To keep the cash and payment safe, I always prefer debit or credit cards, but the dealer asked me for 2 percent extra and I paid it 🙁 around 1800 rupees i guess.

    OMG, So it means I got cheated right ????

    Apart from this, even the service is not good. After first service of my bike, I saw mud in silencer which is not cleaned on water service, oil leaking from left side of engine, etc…. I’m frustrated on this. Huge loss.

    1. Hey Chidambaram

      Thanks for sharing your experience with all of us. It was a great learning.


  97. Binay says:

    Complaint about Dr. Pansare Diagnostic Center:
    Today 02 Nov 2015 at around 7 PM when I was asked to pay 4500/- for Meningitis vaccination for my kid at Atharva Child Care Clinic at Thergaon Pune-33, I said I’ll be paying by credit card. I was asked to swipe my card at Dr. Pansare Diagnostic Center at 1, Damodar Heights, Nr Pawana Sahkari Bank, Kalewadi phata, Thergaon, Pune-33. This place is at the same building on another floor.
    They said, they will charge 2% extra. I informed them about the regulation that customers should not be charged 2% as surcharge. But, they insisted upon applying 2% or I should arrange for the cash. Even the Doctor refused to listen and said they will not swipe my card. They said, there is some problem in the swiping machine and asked me to arrange cash instead and started refusing to swipe the card.
    Only choice left for me was to go to ATM and take out cash. I had to travel 1 KM to visit the nearest ATM. Its how they harass the customers.
    Please take this as serious concern as we do not carry cash every time with us and the merchants take advantage of this fact.

    1. Thanks for sharing that Binay

  98. Ravindra Joshi says:

    Use of plastic cards should to be encouraged! All transaction made through cards are transparent. RBI should intervene and fix the some nominal charge one time for the merchants to use swipe machine or even it can be made free. Indirectly govt. get the benefit in terms of tax collection. All the businesses( like hotel, doctors, retail shops, medical shops etc.) should be made compulsory to accept the cards. This will help the IT dept. to increase their tax base and also avoid the black money formation. As part of Digital India, all the citizens should be able to use the plastic cards hassle free. Hope that that day will come soon!.
    Debate on this should be taken up in media!

    1. Hi Ravindra Joshi

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  99. Pradeep says:

    I use PNB debit card to make payment on petrol pump. I noticed, petrol pump gave me slip for the amount I purchased the fuel, but, Bank debited extra from my account. I purchased fuel for Rs.1650/- and bank debited Rs.1697/-. I called bank customer care, to inquire. They said it is minimum Rs.10/-extra plus service tax. This is awful, why should I pay extra just for making payment by debit card. Can any learned friend advice me what action should I take against this. Is it against rule?

    1. I think you should protest it . I also pay by debit card and I am not charged extra

    2. Shirish says:


      Actually there is Petrol viewer of 2.5% charged once you exceed the amount per monthly transaction amount which will be differ from bank to bank, it may be from 200 to 300 rupees per month. Example : If you use 100 rupees of petrol they charge 2.50 paisa however, you will get back this amount up to 250 rupees, after exceeding this 250 rupees in a month then you have to pay 2.50 paisa…

      1. Sasidharan says:

        This doesn’t work all the time. 2.5% waived for transactions of range 400-10000. But this varies from bank to bank. And some banks waive the 2.5% immediately on the transaction, some give cash back. Those following the cash back model, don’t credit the full 2.5% So every time it ends up in paying something extra which I don’t know where it is accounted. I protested initially, but this has become a norm.

        Manish, It is no use appreciating and thanking the comments unless you take some concrete action and investigate how the money flows and where.

  100. Nayan says:

    If the banks/govt. want to increase the use of plastic money(which is a very good Idea) and also want to levy taxes or restrict no of ATM transactions then it is directly squeezing end consumer or people of India. Everyone can count their day to day expenses and taxes paid on it and see that we Indians pay around 50% taxes on our income(including Direct and Indirect taxes), whereas only 3% of our population pay direct taxes. I welcome step by RBI but this should have some implications on banks if such practices are being followed where profit margin are high (e.g. 15% and above).

    What are the action banks have taken against merchants who still charges 2% extra? Even If any bank have terminated their relationship with any merchant, does RBI have any mechanism where same merchant will not get POS machine from another bank? IF not then why such decisions are not taken by RBI?

    1. Hi Nayan

      good points. I am not very sure on what has been the end result in cases like that.

  101. KUMAR says:

    Same Issue Happened with my friend today, we went to Access Motors for servicing his Bike, at Cash counter of Access Motors Showroom (TVS) asking for 2% extra amt apart from the Bill. I told them that this is stopped by RBI, they were not aware on this.

    1. Its not a regulation as such. Its a practice which is there in market that the fees merchants have to pay is asked from the customer directly!

      1. Saravana Kodandapani says:

        Right, & the practice is correct because merchants have to earn that money from the customer in order to pay the banks..there is no free lunch. The merchant can refuse to provide the convenience of paying by card to u as it is not mandatory for him . So many vendors do not offer card services.. So, it’s time consumers realized that all value adds like valet parking, free Wi-Fi, card payment facility, air conditioning etc come at a cost which is finally passed on to the end user..

        1. I understand that, but the extra price you charge should be bundled in the price itself and one should not be asked for X% extra .

          The convenience of paying by debit/credit card brings more business. If you just run on cash , you will do less business and less profits.

  102. Saravana Kodandapani says:

    I think its only fair that the charges are borne by the customer. Providing the Credit/Debit card payment option is a convenience value addition that a bank in partnership with a facility offers to its customers. There is a cost involved in providing such convenience facilities and it is 2% of the transaction cost. This money goes to the banks for having provided this facility to the customer at the merchants place. If RBI is genuine in its intent, it should prevent banks from charging the customer this 2% directly for transactions at petrol pumps, govt agencies etc … RBI does not have the intent to call those transactions unlawful, but is ok with squeezing the merchants to absorb this 2% as they are considered as soft targets. Why does online ticketing agencies like get to charge you internet handling fees separately?? Why do banks get to charge you commission charges when you buy DD separately?? one can argue that bookmyshow .com should consider it as cost of running the business and should take it out of the cinema theatres profit ..Similarly the DD charges should be waived off as the amount is deposited in the bank for a varying period which is interest free when every DD is bought.. Ultimately it is the end user who has to bear the charges and the merchant is only a facilitator in this process..Asking him to absorb these charges is absurd and amounts to wishful thinking by RBI which is just trying to be populist at the merchants expense..Most establishments that do not charge actually have built in this expense in their overall charges and charge the same to even cash paying customers. So in effect they are actually charging 2% extra to cash paying customers also. So they are not angels as the writer is trying to portray them..they are just smarter businessmen who know how to outwit the system easily..

    1. Hey Saravana Kodandapani

      Thanks for sharing your experience with all of us. It was a great learning.


  103. Prasad says:

    Hi Please confirm is there any service charges for Credit card Purchase? because some of the reputed vehicle showrooms charging 1.3% to 2% charges

    1. ANIL says:

      Yes.. Because the Margin of a Two Wheeler is only 4 to 5 % on the cost of purchase. If they wont charge the dealer will lose. Out of this 5% the dealer has to bear 2% . If they cannot charge the interest which is levied by their banks who are facilitating the machine, they will have to close their show rooms,..

    2. Yes, there can be extra charges

      1. Byagatavallishankara says:

        My only point is that there should be a clear and bold display at the bunk(or at any merchant place) regarding extra charges. Leave the option to the buyer. Saying one ting and doing the opposite is violating ISO 9000 series of quality(in whichever field)

  104. ByagatavalliSShankara says:

    I used my Syndicate Bank debit card for purchase of petrol at an IOC outlet. I asked the person at the outlet as to any extra charges if I paid by debit card. He said that there is no extra charge. I swiped the card and signed the slip which showed only the amount towards the purchase(rs 500). Only when I got my pass book updated after 15 days, I noticed that there was an extra charges of Rs 14.25, debited to my a/c that too after 3 days of date of purchase. I have taken up the matter with the bank and asked them for an explanation which is awaited. Since the extra charge is debited by the bank based on a debit note raised by the owner of the swiping machine, under a legal contract between the bank and the acquiring company, I hold the Syndicate Bank responsible for this act. I intend to take it up with consumer dispute redressal forum also. Pls give more legal inputs if any.

    1. manu says:

      boss, its obvious that the petrol bunks charge extra transaction fee or service fee for the amount you swiped on the card. Its your mistake. u need to check the conditions before taking your card. its obviously mentioned in the book let which u have received. don’t be ridiculously pointing at the bank or the petrol bunk. almost all the cards charge this. unless until co-sponsored by the petrol bunks like hp -visa icici card etc. get educated about the rules and then talk in the blogs.

      1. Byagatavallishankara says:

        When there is no booklet supplied, when there is no display at the petrol bunk about the extra charge and when the operator replies that there is no extra charge, and finally when the slip (that comes out of the machine kept by the bunk operator), on which I sign does not show any extra charge, what more is needed to prove that this is clandestine work. Display and leave it to the consumer to decide if he/she wants to pay by card. I am not saying it is illegal but cheating.

    2. First see what charge is it exactly

      1. Byagatavallishankara says:

        It is Rs 14.25 for a sale value of Rs 500. How does it matter, any way? The principle objection is unfair trading practice by not keeping the customer in the loop. See my reply to another above. Thanks.

  105. Yogendra says:

    I faced this issue few days back. I was charged 2% extra as “Bank Charges”. I have the invoice with me. But the problem is the implementation of the RBI notification. The POS machine the shopkeeper used was of HDFC. I spent 2-3 hours looking for a way to raise a complaint against the merchant but could not locate one. So the other way was to contact the customer care. I mailed them the transactions details and interestingly they forwarded the request to Credit Card department. Today I got the message from their credit card department that they are not able to locate my credit card. I am literally laughing right now.

    I have also sent the same email to RBI as well but no response till now. There is no point in sending notifications to the banks. Its implementation and execution is what really matters. Right now I feel helpless as a common man who is a victim of bureaucratic loopholes and target thirsty financial institutions surrounded by dumb ***holes creating rules for a better system.

    God bless India!

    1. vinish shetty says:

      Hello yogendra, even I faced the same problem I got charged 2.8% by shell in Bangalore I bought the fuel on june16 2015, but was charged separately on 30th June, if the merchant is charging customers illegally to cover his charges he has to pay to the bank, this is illegal and I would suggest raise an fir on the business let the matter go to court.

    2. Hi Yogendra

      I suggest that you now take the RTI route. You can file the RTI and ask your queries to them. THey are bound to reply you on your queries.

      Its a bit long cut, but works well


  106. Abhinav says:

    I understand that what you have written above is totally logical. But in today’s world where the market is so competitive that consumer bargain for every rupee, it will not be possible for merchants to pay those extra charges to banks. I too had jewellery shops where the transactions amounts in thousands and lakhs. We do not discourage customers by charging them that extra 2-3 % charge but when we sell goods at low profitability, it’s very hard to pay those charges and it pinches a lot.
    Now a days banks have also increased the charges drastically which amounts to 1.2 % ( including service tax ) on domestic debit cards and 2.8 % ( including service tax ) on domestic credit cards and foreign debit and credit cards. Fees on domestic cards are fine but on other cards it’s way to high. As I received mostly foreign cards, so I end up paying 2.8 % to the bank.
    Instead of taking actions against whether the consumer has to pay charges or not, I think RBI should take measures on the issue of fees charged by the banks. I think any charge between 0.5 – 1 % ( including service tax ) on any type of card should be acceptable by merchants and they would encourage people to use cards or as we say plastic money.

    1. Hey Abhinav

      Thanks for sharing your experience with all of us. It was a great learning.


  107. Hitesh says:

    If govt. and RBI feels that we are stepping towards digitalisation and progress, then I think this type of surcharges applied by banks are bullshit. One side banks encouraging plastic money and not to carry hard cash and on the other hand they charging for swiping to the merchants. And in this competitive market we as a customer bargaining for that last one rupee, then we ask for credit or debit card. So how can a merchant give from his pocket?
    So, my question is; “Is it possible that RBI forcely order to banks not to charge for swiping machine for every swipe. Or a negligible minimum amount that a merchant can bear and encourage customers to use debit or credit card every time and not to carry cash.”

    1. Hi Hitesh

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


    2. Anil says:

      You r exacly right Mr. Hitesh

  108. Pankaj says:

    I had the same experience of paying 2% extra on credit card transaction. The incidence happened on 6th June-2015, i went to buy a TVS Scooty from Trijal TVS, Whitefield-Bangalore. The sale person told me that if i opt for payment via Debit/credit card then i have to pay 2% extra. Well, so i asked lets say if i pay you the entire amount in cash will i get some discount etc, the sale person told me that even if i pay by cash in that case also the price remains the same i.e. 50K no discounts. I also explained him about the RBI guidelines issued in this regard & told him that it is not an acceptable practice as per the RBI guidelines, he gave me the reason that Bank charges us so we will charge you, we really don’t bother what RBI guidelines states. Left with no choice (as i was not carrying 50K in cash at that time) i paid via credit card & asked them to Bill the 2% amount as a separate transaction. So the cashier swiped the card on POS twice once for 50K & then for 1000(2% of 50K). I also asked for a receipt of the 1000 which clearly state 2% interest charged on 50K for payment via credit card(to my surprise which the cashier gave me without any objection). Now i have receipts of both the transactions & have already spoken to my credit card issuing bank for a “Chargeback”. Next step will be to send the required proofs (Receipts & Transaction Slip) to the Bank & lets see whether they can really process a chargeback. Will keep you all posted on my progress.

    1. Hey Pankaj

      Thanks for sharing your experience with all of us. Let us know whats the progress


    2. Venkat says:

      what will u do if you are charged to use ur debit and credit card directly with a 1 to 2 % charges for every transaction. why should be the merchant be charged for your transaction. u pay him cash. he is happy . his maximum profit is around 2 % for all types of recharges. profit ka profit bank ko de dega to khayega kya … ask the bank to stop charging him for every transaction.

      1. Chandrakant says:

        the best tell him to return the ADC machine if he cant earn profit.

  109. Aryan says:

    I had the experience today. A shop called Modern Sanitaryware in Thrissur, Kerala asked me to pay 2% extra for credit card and 1% extra for debit card. And ultimately, like many others, since I had decided to buy from them, I went up to an ATM and paid cash. I am planning to go to same shop again and intend to give them a class….!!!

    1. Hey Aryan

      Thanks for sharing your experience with all of us. It was a great learning.


  110. chennan says:

    Sri ramachandra hospital and KKR ent hospital is charging like that !! so painful to inside those hospitals ..
    One side ATM withdrawals are limited and service charges are applicable and other side these sort of service charges are applicable.
    Both the cases we are becoming fools..
    Is there any strong slap notice given to hospitals and jewellerys who are looting other than the payment indirectly..
    Need a clear front page news to public is important from RBI side.

  111. karthiken says:

    Dear Sir,
    Why all the hospitals and jewelery shops are charging 2% service charges for cards even though they knows its violationa agianst RBI.
    When i argued to them they are saying dont come to our hospital or shop or give cash.
    Other side banks are charging ATM useage restriction against 5 times.
    Who is going to restrict them !!!!
    Eitherways we aam aadmi are cornered in india !!!.
    Jai hind !!

  112. Sunny says:

    Shopkeepers are right in their own way and rbi’s guidelines are bullshit. specially for small margin items.
    one thing is why banks are charging merchant? that too 2% and then they charge customers for annual fees for what ?. And both the things benefits bank not only that they reduces thier own overheads as when transaction gets easy and convenient less people will visit branch and atm.
    cards are supposed to be and banks should charge 0.5%. rbi should make this standard for card swap machines

    1. Hi Sunny

      Thanks for your sharing your valuable comment on this topic. Please keep sharing your views in future also


  113. Deepanshu says:

    Hi Manish,

    This article talks about the 2% extra that merchants charge customers. But recently I was surprised when “Mani’s Biryani” @ Kormangala Bengaluru offered a 6% discount if bill is paid by debit card, & not cash. This was the first time that someone was offering a discount on the use of card & not cash.

    Could you please comment how can this be the case…

    1. Debit card payment is instant , and convenient and hence brings more sales .. hence the discount . Its more of a strategy !

  114. Kapil says:

    Hi All,

    Today, I went to shop and purchased 69 rs items and to pay that amount I have no change, so I decided to pay by debit card as shopkeeper is having card swap machine. I have given my debit card to pay but he told me that minimum i have to spend 100 rupees after only he can swap the card so, I bought milk packet but he told me that he will not get benefit from milk so i have to buy some others products from which he is getting margin otherwise i can not pay by card. And since i don’t have change I could not buy any required items.

    My question are,

    When shopkeeper is having card swap machine than why he is not allowing to swap debit card for any transaction?

    If he is not getting any margin from any product then we can not buy it with card?

    To whom we should complaint about it, So that next time others does not have to go through it


  115. sourabh says:

    i buyed a iphone and the shopkeeper charges me 2.5% as a processing fee.
    i disputed bt he said tht cx has to pay the fee if he buys nt sure
    whether its the case or nt.plz reply wht shld i do ?

    1. You mean you were charged when you paid by card, right ?

  116. PRADEEP ARUL says:


    1. Whats the question here ?

  117. Rajendra says:

    When you are getting competitive /best price of artical,you have to pay 1-2% charges,because when you get best price,who will pay the charges only you,because now a days due to heavy competition, 1-2% margin is can not be sacrifice.after all charges has to pay to bank only.

    1. Whats the question here Rajendra ?

  118. siddharth shekhar says:

    Link to the circular regarding debit cards:

  119. Thanks for this wonderful post, and I have a doubt.

    I just paid my LIC premium online and while going though gateway, it says a percentage would be charged as convince charge on debit card.

    Is this correct ?

    1. YEs, thats ok, In this post, we have only discussed about CARD SWIPE !

  120. Neha says:

    What about petrol bunks charging when we use Debit cards for the transaction. We come to know about these charges only through the bank statement we receive some days later. Is this legal?

    1. Which charge are you talking about ? Those are “surcharge” which is differnet thing and not related to this !

  121. Sandeep Godbole says:

    Kindly give me the link of the RBI website which has released this order.
    Thanks !

    1. Looks like you didnt read the full article . The link was there in the article itself

      1. Chandrakant says:

        Hi Manish, At near my place there are few shoppers who put a board of extra 2 or 2.5% extra will charge on card…. what can we do in this case ?

        1. Sadly, as per rules, its not allowed , but reality is different !

  122. Sadananda Nayak says:

    I have a little different opinion on this.

    Imagine a merchant is willing to pass on the benefit of transaction charge saving to those customer who pay in cash.

    Imagine, I am a mobile vendor. I wish to provide discount to those who are paying in cash. So if the mobile MRP is Rs.10k, I may charge 10k to those who pay in credit card and Rs.9800/- for those who pay in cash. Here I am simply passing on the benefit to the customer.

    Generally, I have seen merchants charging extra, when they are providing deep discounts on MRP. There is a restaurant near my office that provides corporate discount of 15%. However, it is applicable on cash payment. Those who wish to pay using credit/ debit card will not get any discount. I guess, it is fair.

    The only place that bothers me is surcharge on Fuel refilling & IRCTC ticket booking. Why can’t the merchant pay the transaction fees in this case?

    1. So you are agreeing to the point which the post makes ? Right ?

  123. Chetan Ambi says:

    Thanks for enlightening on this matter Manish. I was not aware that its illegal. Though I have’t faced this issue till now may be it info will be useful in future. You are doing a wonderful job Manish !!

    1. Thanks Chetan .. Note that this came into light recently for debit cards by RBI , wordings for credit cards is still not clear !

  124. Fazal says:

    Why can’t any governmental body in our country make a rule which can be followed by all people? Im very sure RBI knows that people do not want to pay 2% for no reason but still it is making such stupid rules of levying charges on debit purchases at merchants end. And that 2% is to be paid by the consumer (who pays mrp for a product) otherwise merchant refuses to sell the goods! What kind of a country we live in??

  125. Yomesh says:

    Hi ,
    I was paying my LIC premium online through Debit card from LIC official site BUT it was showing you have to pay 2.5 % extra when I argue with the LIC officer, please explain me the reason behind it & also I shown the RBI rule BUT no response from their end. What should i do now ?

    1. You can now file a RTI against LIC asking for explaination !

  126. harivwr says:

    Is it for credit cards too..

  127. Amit says:

    Does anyone knows how to launch a complaint to RBI against such activity?

    1. You can write a letter to them

  128. Rounak says:

    Again many thanks for this information, i cannot find people like u on the internet who are helping others & in turn educating themselves & making them aware of such small things which really matter. Thank u for educating us . Cheers

  129. Shuktesh says:

    Government and RBI should encourage using plastic money….It will reduce the chances of tax evasion and corruption.
    Even if merchants are rewarded for transacting through cards, it may be beneficial for the economy of the country.

    1. Yes.. I agree with you

  130. Karthikraja says:

    What about 2% sur charge on Petrol fill ( whether u use Debit card or credit card)?
    Is it still applicable or waived off as per above article ( atleast for debit card)?

    1. If some charge is already defined by the bank or petrol pump in white, then it will be applicable

  131. I do not like this decision at all. Merchants do have to pay extra charges when they process a card payment. In the old system, these extra charges were paid by the people who used their card. In a sense, they were purchasing convenience with the extra charges.

    Even with the new system, merchants will not be willing to reduce their profit margins by paying card payment processing overheads from their own pocket. Instead, what will happen is that they will recover those charges by increasing the prices for all buyers to recover the additional costs. Thus in reality, this move reduces the choices we consumers have. Previously, we could explicitly decide if we wanted to pay for the convenience of using a card. Now, we don’t have that choice.

    In a sense, we will be funding the business of card companies (Visa / MasterCard) by this move, and there is no reason we should all have to do it.

    1. Thats a view I believe. RBI view says that a consumer should not pay more just because mode of payment changes

  132. Aniket says:

    This practice is done not only by just shops or merchants, even I have faced it at reputed hospitals, when they tell you that if you pay by card, they will charge 2% extra. As you rightly said it’s convenience charge to be borne by the seller/merchant outlet, but always the consumer is at the receiving end. Hopefully your article and its reach will spread and more people will refrain from paying extra to the merchants or any vendor what so ever.

    1. Thanks for sharing your real life experience on this matter.

  133. bemoneyaware says:

    But why RBI says only on debit card? Why not on credit card?

    1. May be because they want to discourage credit usage ? who knows !

  134. Joel Trinidade says:

    All the above arguments are valid but my take is that merchants want to have all transactions in cash for reasons of saving on tax and other under hand tricks which they employ in order that there revenue does not get routed via the bank.


    1. Yes, it might be the case

  135. Sri says:

    If we pay by card only, then that cost will be ultimately included in the charges of that good. I would rather get a discount of 1-2% on that good by paying cash than paying that amount to bank where neither me nor merchant is benefited. Ultimately, its only the bank that gets benefited with card transactions.

    1. Thansk for sharing your thoughts on this

  136. Jnan says:

    I used pay by cash & take 1% return after final bargain!

  137. Shankar says:

    If shopkeepers give heavy discounts on products they may not bare POS burden. If RBI imposes restrictions then shopkeepers may not sell products at discount rates or they may not provide POS facility.

    1. So what is your point overall ?

    2. Vaibhav says:

      Shopkeepers do not give discounts from their own pocket!!!! They themselves chose the POS facility. There are still thousands of shops that do not give POS facility and are still doing business. Its plain cheating.

  138. NIPA says:

    YES !! I had gone through such experiences a lot of times in my daily life. But i had excepted the situation. Often I get the cash from nearby ATM or if I have it, I pay in cash. OR i pay that extra 2% as if its my duty to pay. The most recent experience I had is in the last week, when I bought my new cellphone. It was exactly the same conversation as you have mentioned above in the article. Finally, I gave up and paid that extra 2%, which was some 250 Rs. Now, today after reading this I am feeling very bad about myself. Till today, I must have paid sooo manyyyyy such extra money to those cheaters. I am really feeling shame on myself.

    1. Thanks for sharing .. It might happen that u just didnt knew about the rule ! . Nothing to feel shame about !

  139. R Choksi says:

    There is a famous outlet ALFA (having 4-5 shops) in Irla, Mumbai. People throng here to buy since it’s prices are supposed to be bit lower than anywhere else.

    They charge extra for card payments and there is no way they will agree to bear that cost.

    1. This article then applies to them !

  140. Anurag Sinha says:

    A year back I wanted to purchase a bike. I went to nearest Bajaj Showroom in Noida. I had half of the amount and rest I thought of making payment through Credit Card. But the salesperson there said me that you will have to pay 2.5% extra of whatever amount you pay through Credit Card. I didn’t knew that such kind of demands are illegal by then and just went out of the showroom thinking better I will buy the bike next month or will arrange money and then come back.

    1. Thanks for sharing your feedback on this Anurag !

  141. kumar says:

    this policy is there across all the merchant vendor, whether you make a payment online or offline 2%, even the govt sites do the same.why there is no clear clause about making a payment using credit card?

    1. there is a clear clause, just that shopkeepers do not honor it

  142. miteshkumar says:

    i really interested i really like please share these type of interesting news next time


  143. Ashish says:

    Ideally, and economically speaking, it’s not a good move.

    If you think merchant will silently bear this charge, they you will be fool. Merchant, of course, like everywhere in world, even in developed nations where additional charge is not levied on credit cards, just increase the cost of merchandise to factor in this cost. Roughly, if you expect 50% of your sale to come from cards and 50% from cash, and you cannot differentiate in price, then price can be increased by 1% to cover for 2% fee. Cash customer loses, and card customer gains (assuming he would have paid 2% extra). That is negative externality. Like, people who walk pay in their health by pollution from vehicle owners. One way to internalize this is penalize externality creators i.e. fuel cess, which is what actually happens.

    Keeping separate option for cash and card will mean that customer has a choice. Either pay less but carry cash (inconvenience of carrying and risk of carrying so much cash) or pay extra for convenience of card. That makes common sense. We pay for convenience always.

    What RBI, and credit card networks (VISA/MasterCard) should do is to formalize this 2%. May be 2% is higher since fee is only 1.5%. Some shopkeepers charge 3%, etc. Make it formal. But keep the difference.

    Otherwise, credit card owner like me is happy. I take extra bit from cash payers, and get rewards/cashback on my card usage too. Common man suffers.

    1. A good perspective I must say, but RBI does not think like that, one can argue if that is correct or not . Their point is simple , the cost to customer has to be same, now its your choice if you want to put card facility or not . If you put card facility your sales might go up which will compensate the 2% extra charges. its a choice you need to pick !

      1. PrAvEen says:

        If the shop is keeping it’s margins low & giving a good offer when I pay in cash, then why I had to compensate for a guy who want to buy on credit card. As this amount is on % basis, with increase in business the debit card charges also get increased.

        1. Correct, so in a way you are supporting this , right ?

  144. Murali says:

    these rules are big joke sin India. Govt owned enterprises dont follow the rule themselves:
    1.BESCOM charges estra if you pay bills online using credit/debit cards in their portal:
    2.IRCTC charges different charges for different banks credit/debit cards
    3. KSRTC also charges 2.5% extra for online transactions.

    According to me, above 3 cases are more serious than shops charging extra, because when we make transactions online, they are supposed to give discounts as they save on their infrastructure spending. In countries like Germany, railway tickets bought online/automated kiosks cost lesser than tickets bought over the counters, its the other way around in our country

    1. Murali

      We are not talking about online transactions here, its about charges on SWIPING the card !

  145. V.SREENIVASAN says:

    Once I went to purchase a college book for my girl in Chennai and I have made the payment through debit card and the Merchant charged me 2% extra charges if make the payment through debit card. No other go I have agreed for this.

    1. Thanks for sharing your real experience on this

  146. Dhanesh says:

    What is the case with Credit Cards payment? The same kind of charges are demanded by the merchants. Is this allowed / legal ?

    1. Seems like even with credit cards its now allowed

  147. Hem says:

    Is it true for online transactions as well? I guess IRCTC charges on debit cards too.

    1. NO , its not true for online payments ,we are only talking about Card Swiping !

  148. bluecrabs says:

    What about credit card transaction fee, why didn’t RBI say anything about credit card? That’s the bigger culprit

    1. Vijay says:

      I guess with credit card purchase, the bank does borrow money to fund our purchases. So they might be justified in levying some (should be smaller than 2%) charges. But with debit card, the bank doesn’t borrow any money. It’s my own money that’s covering the payment. That ought to ‘realistically free’.

    2. If its online transactions , thats allowed , we are talking about card swiping here !

  149. vijay says:

    I recall buying a 2-wheeler for a friend and the dealer asking for 2% (or was it 2.5?) if paid by debit/credit card. I didn’t argue with him, but it wasn’t a good feeling walking around with ~80 grand in the pocket that I had to withdraw from ATMs.

    B’loreone too has this convenience fees, as Ramesh pointed out above. I think this can circumvented by opting to link the payment to your bank account. I have done that and I don’t think I’ve paid anything extra since

    1. What do you mean by linking it to your bank account ?

      1. Vijay says:

        Oh, I meant the e-pay option or netbanking. For instance, for SBI we have the following – – If I choose to pay with a card, I pay the ‘convenience fees’, but with e-pay I haven’t see that come up…

        1. Ok , but there is no clarity on charges for that online payments .

  150. SantoshCA says:

    yes. I wanted to purchase 2 gb ram worth 1500rs thru my cr card.. the shop owner says if paying by card give 2% extra else there is an atm in next lane.. u can pay by cash…
    I told him no body takes extra then why u are asking? he says that is a rule by the bank… I was laughing at him… 🙂 just left the shop…. 🙂

  151. Ramesh says:

    what would you do when the Government’s own department does that? which is a service provided by Karnataka goverment, charges 2% on most of the services offered by them. I pay Electricity bill regularly and pay 2% extra everytime on credit card. There is only one option in Paymode “Credit card/Debit Card” so whatevery card you select you are paying 2% extra.

    1. Ramesh

      Thats online payment, for which there is no direction from RBI . This article talks about the merchants charging for card swipe !

  152. Ashwin says:

    I would say, better pay by card, since you will get your slip, then you can complain against the merchant and get his card payment disconnected. But then, can this merchant get another payment facility from another payment bank gateway? 🙂 then wats the use of my complaint

    1. abhishekpy says:

      I guess there is 10rupees per credit card transaction upto 10,000. and 12.36% service tax on top of it. so its 12.36Rs on each transaction upto 10000 bracket

    2. Yes, he can take it form another, but the use of this is that more work added to the life of merchant . If you are one of those who is happy to see others in problem, its a good option !

  153. vivek says:

    we need to pay some service charge and convenient charges on LIC online premium

    1. The article is true only on CARD SWIPE facility and not for online payments

  154. Pushp says:

    I have faced this situation many times, but could not argue much..But Now, I will take stand against this unfair means, n will definitely complain, if he don’t agree… Thanks very much for enlightening Us..

  155. Neeraj Agrawal says:

    I cannot help thinking, even if we all stand firm that we will not pay the extra 2%, what will happen eventually??
    Seeing that people are adamant about the 2% extra charges, the merchants may gradually stop providing this facility!
    I don’t wish to go back to the era of Cash payments everywhere!!

    Just a thought!

    1. Yes, that can happen , but then its merchants choice . If you are happy to continue, its a welcome thing !

  156. Vishal Sanghvi says:

    Need clarification of credit card payments? I usually see the comments to find answers for any doubts in the article. In this case I am unable to find out the if its ok to pay 2% extra for credit card transactions …

    1. The article is true only on CARD SWIPE facility and not for online payments

      1. Vishal Sanghvi says:

        Understand it is about CARD SWIPE facility … even when credit card is swiped like debit cards, merchants demand 2% extra. Does this RBI notification hold good if a merchant demands 2% extra for a CREDIT CARD SWIPE? Or is it restricted only to Debit card swipes and merchants can demand extra for credit card swipe.
        Appreciate clarification on the matter.

  157. Sunil says:

    Local Jewellery Shops anyway cheat in more than one ways, and no wonder they WANT ALL CASH; similar is the case with most traders, shops, etc We are a cash economy and paying the price for it ! (Many SMEs too indulge in CASH to avoid CED, ST, IT, etc.) It is upto us to resist such fleecing as is done by some of these “chors”. No hopes from corrupt “system”.. BTW, what is the position about CREDIT cards??

    1. No clarity on credit cards right now

  158. Sushil Girdher says:

    In 2002 when i finalised the deal to buy a LG washing machine and after bargaining price was lowered by 200 rupees, when i wished to pay through Debit Card, merchant said he will charge 2 % extra……..he told me to bring cash from ATM to avoid extra 2 % charges…..So i purchased through cash ……….BUT A QUESTION CAME TO MY MIND………WHO WILL Buy any item using debit card if it is charged extra………But nobody was able to reply my query……….later in 2010 after getting my credit card……..when i purchased laptop and shirts…..i was not charged extra……….then i inquired from merchants that why u are not charging extra………..they said …….Now those days are gone when extra was charged………now a days no body charges extra for using credit cards………..Since then i m using my credit card for online and some offline transactions…..

    By the way pls explain……….what are the charges a merchant has to pay to bank for providing card payment facility to his customers?

    1. Its 1-2% only which they have to pay !

    2. Indian says:

      Previously they may used to have a margin of 10% on goods. Instead of arguing with customers they would have increased their margin to 12% and accepted the card. Now the guy who at loss the is the guy who buy with cash. With cash or not he had to buy at 12% margin

  159. Mukesh says:

    This understanding should apply to credit card transactions, too – fees paid to garner more business. Even though I haven’t heard RBI on credit cards, can we as customers complain to the bank in this respect?

    As regards Praveen’s submission, if we the customers start worrying about trader’s margins, will they in turn provide rebates for inflation, tax, etc? Moreover, more than the customers, traders are vigilant to protect their own interests. After all, they measure every rupee of profit or loss!

    1. I think everyone does think about their profits 🙂 . You can complain to bank on this, but I am not yet clear on the exact rules !

      1. Mukesh says:

        One of these days I may complain, if unable to bear it anymore. If so, will share the experience for everyone’s benefit.

  160. Divya says:

    How about online transactions? Are they also not allowed to levy the 2% extra charge?
    I have paid the 2% online many times. Thanks for the wonderful article. Divya

    1. The article is true only on CARD SWIPE facility and not for online payments

  161. Ravi says:

    Sir, Is this applicable for banks that charge for IRCTC tickets that are bought from web too using debit card? Because here it is a bank and not merchant. Please advice.

    1. The article is true only on CARD SWIPE facility and not for online payments

  162. PrAvEen says:

    Some businesses like Electornics/Automobiles operate on a thin margins. So there is truth by shop to asking to pay in cash so that they can avoid those 1-2% extra commission & save money. So those shops were asked to not to charge extra then they had to increase their overall rates to cover these extra charges even for the guys who don’t buy through cards. If you take a cheque which is requires more processing time of bank then it’s free, but if you use Debit card which is automated then you had to pay commission.

    In towns 99% ppl won’t use any cards although they have it.
    First RBI had to bring down this transaction cost. Why a Electric shop had to pay 1.8% commission on a 50k TV? The banks can charge a flat fee let’s say 100rs for above 10k transactions

    1. Thanks for sharing your views on this topic !

  163. prasanna says:

    I too have the same doubt as above. What about swiping credit card? any one please clarify

    1. abhisheka says:

      I got same question … what about CC?

      1. Unclear to me right now

    2. No clarity on credit card yet !

  164. Pradeep says:


    Thanks for sharing this piece of inforamtion. I have been searching for such a clause or proof to fight against the merchants.

    Whenever I go to the jewellery shop and purchase an ornament, they demand for 2% transaction fee for credit card payments as well as debit card payments.

    Now that you have gathered information about debit card part. I think I will have to try and find about a clause for credit card transactions.

    In my view, if an establishment says that they accept all credit/debit cards, they are indirectly saying that they want to capture the business benefit of opening credit card payments. They would have agreed to pay a royalty for the banks per transaction which is as per their agreement with the respective bank.

    I don’t see a reason as to why the customer needs to be puled into this transaction. If they don’t want the business then they better say that they don’t accept cards instead of taking 2% for the transaction.

    1. Thanks for sharing that Predeep !

  165. sweta says:

    Sagar hospital bannerghatta road does this.. I clicked on the icici link to complain but it redirected me to an irrelevant page of pos terminal. .how will I know terminal they use icici or axis?

    1. Chethan S. says:

      You will get this information in the transaction slip – bank’s name would be prominent (printed on the top).

    2. You will have to look at their counter for this

  166. Gaurav Doshi says:

    Thats a rescue statement from RBI – 3 cheers for RBI.
    I have faced similar issue when purchasing bikes in pune worth Rs.80k and Rs.65k.
    Paid 2% extra on the amount paid through card.

    By the way Manish – hope rule applies for CREDIT CARD also?

    1. Thanks .

      We are not clear about credit card yet !

  167. Soaham says:

    I have come across these things for any sort of card payments… What I want to understand is, why the RBI Notification is only for Debit Cards? So is it okay if the Shopkeeper charges 2% for Credit Card transactions?

    1. prasanna says:

      I too have the same doubt as soaham. please any body can clarify that. RBI says that charging for debit card transaction alone is illegal. what about credit card? will the merchants continue charging for credit cards?

      1. No full clarity on credit cards yet !

    2. Swapnil says:

      In Pune Telephone shoppe is one of the major in cellphone sales ,I recently faced this situation there . How to tackle this ?

      1. We have already written about “what you should do” part in the article

    3. Not sure on credit cards yet !

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