What can we do if a merchant is demanding 2% on credit card payment?
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If it's a small item we can buy it in another shop but my brother is buying a bike and showroom accountant asking for an extra 2 percent. How can we avoid it diplomatically?
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You can complaint about it to the bank who issued POS device to them/consumer forum near you.
It's compulsory to show the sign that they are accepting cards if they do possess the POS device and accept it without any charges.
From a team BHp post:
Offline Charges (When you swipe your card at a store) :
Debit Cards:
In India Debit Card charges on offline modes are controlled by the RBI.
For Transaction less than Rs 500 - 0.25% of transaction value (Waived of till 31st Dec 2019)
For Transaction between Rs 501 and Rs 2000 - 0.5% of transaction value (Waived of till 31st Dec 2019)
For Transactions above Rs 2000 - 1% of transaction value
Credit Cards:
The MDR’s for credit cards however are deregulated. The RBI doesn't control them. This is because in addition to the cost of processing the transaction, credit card issuers need to recover the cost of the credit also which they have extended to the user. Generally you will find credit card MDR’s to be in this range:
VISA / MasterCard Non Premium Cards - 1.25% to 2%
VISA / MasterCard Premium Cards - 1.75% to 2.5%
American Express Cards - 2.5% to 3.5%
Online Charges (When you enter card details on a website / mobile app):
These charges are again deregulated and depend on a lot of factors. A general rule is to add 0.25% to 0.5% extra to the offline charges to determine the online charge. This is because online transactions (known as CNP - Card Not Present) are inherently more susceptible to fraud and so the issuing bank needs to cover for that as well.
Wherever deregulated, charges are negotiable based on the expected transaction volume and the nature of your business. In addition to these variable charges you may need to pay the cost / rental of the swipe machine (offline) and integration costs (online)
Ask another bike showroom of same company (preferably a bigger dealer, they are less fussy than lala type showrooms).
It's a tier 3 town with only one Yamaha showroom , next near is 200kms away.
Charging fees for credit card swipe is no longer illegal. It's only for debit card.
It was never been illegal. Earlier very few cc was in circulation so merchants not bothered to charge. But now cc usage jumping there operating expenses jumped related to cc jumped a lot. So now slowly all institutions and merchants started to charge it now.
Cc user is using credit facility for payment. So there is nothing wrong if he bears some costs merchant incurring.
Okay, all you need to do is buy some small item from that shop. Know which bank swipping machine they have or what's their settlement acc (it's written on the top of the machine or on the chargeslip).
Google "xyz bank merchant customer care" or "xyz edc customer care" or "xyz pos customer care"
And call them and tell them that they are charging it.
If you want to get their machine cancelled, buy it at 2% fees, and then email that chargeslip to the bank. Bank will cancel their machine.
Actually, small vendors can't afford 1/2% MDR charged by the bank. But they do possess it for the convenience of the customers or the emergencies.
These fees go up to 4-5% when you swipe your Dinners/Amex card. Many merchants might not be doing business with that much high-profit margin. They only get to know the exact settlement amount after 1-2 days.
You can complain to the POS company else there is nothing you can do other than bargaining the % or ask for freebies like water wash. This problem exists in Bangalore too.
Just Plead