Merchants restart charging customers for card usage

owners in many parts of the country have resumed charging unlawfully a premium from customers who pay with cards, undermining the government’s efforts to promote digital payments.

The agreement retailers sign with banks for card-swipe devices — technically called point-ofsale (POS) terminals — contains a clause forbidding them from charging customers for the facility.

But the malpractice is growing, especially in smaller towns and among a section of smaller stores in big cities, say trader body officials.

There is no official data but trade bodies back anecdotal evidence of the malpractice spreading.

“Transaction charges are one of the major deterrents in adoption of digital payments in the country and we are aware of

Retailers' agreement with banks for swipe devices forbids them from charging customers for card usage

Card transaction charges are divided between banks involved in the transaction, the firm that installed the device and payment gateway companies

These charges were suspended shortly after demonetisation in November

At many places, retailers have

this... Neither the traders nor the consumers should be made to bear the charges,” said Praveen Khandelwal, secretary general, Confederation of All India Traders (CAIT).

The charges, called Merchant Discount Rate, are divided between the banks involved in the transaction, the firm that installed the POS devices and payment gateway companies again started passing on the burden to customers

Traders defend the practice, saying the charges eat into their profits such as Visa and MasterCard. The Reserve Bank of India capped the MDR on debit card use at 0.5% for transactions of up to ₹1,000, 0.75 % for those up to ₹2,000 and 1% for those more than ₹2,000.

There is no cap on MDR in credit card transactions but banks usually charge up to 2%.

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