Did you know that you can file a complaint with the RBI if a merchant charges you MDR fees for using a credit card?

[AllSeeker]

And for this reason, MRP itself is hiked by 20% so to make sure merchant is protected. Not long ago I bought a portable table, which had MRP of 4000+ printed on box, merchant sold it to me for 3000 if I was willing to pay by cash and UPI.

Never trust MRP printed on product as its a scam in itself. Try to gauge market value of product based on its placement and other competitors.

Only unfortunate thing about this is that ppl who don't negotiate, or don't complain or have credit cards to take advantage of offers are always victimized by merchants.

 

[blacktiger]

If one marks up the invoice value to include transaction charges and the product is sold below or at MRP

this is what they do. when i went for purchase of pc parts, pretty much every electronic seller i came across, did this thing

 

[RaviAglRaviAgl is verified member.]

this is what they do. when i went for purchase of pc parts, pretty much every electronic seller i came across, did this thing

Totally agree with this. But the card payment system is so flawed (in terms of MDR charges to merchant) that we come up with 3 prices (believe me). Say, you want to buy some product Normal Price, we quote is Rs 40,000.00 & if the SBI is running an EMI offer of Rs 5000.00 cashback or instant discount, then we offer to the customer 3 prices -

1. Price by Card - Rs 40,00.00 Less 5,000.00 + Card Charges 2% (since customer is already getting benefit in form of cashback, he is not likely to object) 800.00 = 35800.00 (EMI expenses from bank, gst on interest, etc to be borne by customer and that we explain to him) Invoice to customer will be of Rs 40800.00
2. Price by Cash (incase customer does not have an SBI Card, but is willing to pay cash) - Rs 40,000.00 less 2,700 = 37300.00 (we source the card from market, share the expenses and cashback with some 3rd party card holder & pay the cash received from customer to that third party). Invoice to customer will be of Rs 40800.00 as ultimately, we will be showing a Credit Card Transaction of Rs 40,800.00 in our books bypassing the cash transaction completely.
3. Price by UPI or Cheque - Rs 40,000.00, since we cannot change to transaction amount and it is recorded in books of either party, Invoice to customer will be of Rs 40,00.00

And yes, that's the way it goes everywhere. Believe me, we don't want to do it but that is the way the whole market operates and so have to do it too. In case of such huge gaps between Cashback and price of products, the customer always wants a good price and so this happens to be the only way to go.

Thanks,

 

[beingmohit]

I once paid a fine for some traffic rule violation with my card. I was charged an MDR. I wonder if they still do it. If yes, are they exempt from this rule? If not, we know for sure that this RBI guideline/rule is a joke!

 

[jetmix]

I have also encountered this during Jewellery Purchase about year ago . Due to lack of know-how, paid with Debit Card.

Thank you for sharing the process and handholding it.

 

[AllSeeker]

Before this turns into "oh the poor merchants have to pay MDR", "that so unfair", "We have to do it because that's how the markets work"

Just think about it for a moment, actually having option of POS is boon to their business, no body keeps large notes in their pockets and most ppl won't be willing to go to nearest ATM to get that, merchants also don't want that as customer sometimes change their mind about buying products.

Also, MRP is structured in such a way that merchants will always get back on their transaction cost, that is MDR. Its not like they will lose money, its case of they "not wanting to pass on the benefit". Worse, these guys offer same hiked MRP to everyone, so even if 10% who use CC (their own or friends, hardly make any difference to them). This is also why you will see much larger discounts on show rooms than on small mom and pop shops. And this is not due to large quantity, they have been too used to doing this. They basically dominated before online options were available and not every city had showrooms.

By the way, this rule is same in all countries, its just our dear merchants are just too used to having it both ways.

What we really need is our collective effort to stop going to these merchants. Complaining to RBI doesn't work usually, so we have to take it in our own hands.

 

[blacktiger]

Worse, these guys offer same hiked MRP to everyone,

problem is this becomes a norm, we are starting to pay more than the product is worth. we are indirecly absorbing the cost they pay to their banks. this was not the case when dealing with cash or upi

 

[RaviAglRaviAgl is verified member.]

problem is this becomes a norm, we are starting to pay more than the product is worth. we are indirecly absorbing the cost they pay to their banks. this was not the case when dealing with cash or upi

All cashbacks, instant discounts, reward points and schemes are a collaborative effort between brands, banks and merchants to attract the end consumer.

The credit card is a financial tool which also works as part of a sales campaign.

It is always upon the customer to bear all costs associated with his purchase.

That is a bitter truth which you feel as a customer and a sweet one from the point of view of the merchant.

Thanks,

 

[AllSeeker]

problem is this becomes a norm, we are starting to pay more than the product is worth. we are indirecly absorbing the cost they pay to their banks. this was not the case when dealing with cash or upi

Exactly.

This is case of normal user suffering no matter what and merchants are shaking off even small costs like MDR just because those take small cut from their overall profit.

And for exactly that reason, irrespective of the country, MDR is always supposed to be paid by the merchant. NEVER BY THE CONSUMER BY LAW.

The fact we allow this practice to happen in India is our stupidity, and also why we need to introduce large players like 7/11, wallmart and costco.

Merchants in India are far too arrogant to think both sides of the coin are theirs to have. Just look at the revolution we had in foods and small goods market after introduction of dmart. Quality of the product is massively increased and with most of the times cheaper cost, and Dmart never complains about MDR.

Funny enough, some small merchants buy from Dmart and sell to local populations now. haha
And cheery on the top, these frugging merchants also like to swipe credit cards when it comes to them to pay for something. That irony

Some problems require boot to the back side.

 

[Divyank gulabani]

I am myself a merchant and I never ask for MDR charges for customers as far as it’s a retail transaction where we keep sufficient profits that sets off our cost and over head operational expenses but when a customer bargains to the core and asks to swipe card we ask them to pay the charges or take the material on retail rate as I am also using my credit cards almost everywhere but I don’t even ask to merchants who have discounted me already as he/she is leaving his margins
Recently I encountered a problem with planet health I purchased a medicine worth 48rs at midnight 1 or 2 and he refused to swipe card giving a lame explanation that below 100rs we would be charged with some charges so the head office has asked us not to swipe card below 100 rs

 

[gurbina]

I'm starting to like this thread. Where do I collect my pitchfork and torch?

There's no excuse for this and many practices. They just want to reap the benefits but don't want to incur into those charges they agreed to, and not just that but also blatantly breaking the bank's terms, conditions, policies or wherever they fall.

 

[theglobalinvestor]

Per my understanding, mdr cannot be passed onto customer is a global visa/mastercard/etc rule that applies globally to all card issuers that in turn applies to merchants. Not aware of any rbi regulation for this.

Edit: I believe convenience fee can be charged legally. In fact, certain payment gateways provide the option to automatically charge the mdr as convenience fee to customer.

 

[ALOAK]

I once paid a fine for some traffic rule violation with my card. I was charged an MDR. I wonder if they still do it. If yes, are they exempt from this rule? If not, we know for sure that this RBI guideline/rule is a joke!

They do they charged me 10 rs mdr charges bangalore traffic police does this. He swips 1000 fine in front of you when you receive statement 10 rs is added as service charge.

 

[NOOBY]

If the bill generated has same amount as the extra 1-2% MDR that they charged, how can you prove ?

Example, If you buy gold worth 10k, and they charge 2% MDR for CC payment and you end up paying Rs.10200, and the bill too gets generated of same amount, then how will you prove that the item was indeed 10k instead of the bill amount ?

 

[Jhon Anand]

I am myself a merchant and I never ask for MDR charges for customers as far as it’s a retail transaction where we keep sufficient profits that sets off our cost and over head operational expenses but when a customer bargains to the core and asks to swipe card we ask them to pay the charges or take the material on retail rate as I am also using my credit cards almost everywhere but I don’t even ask to merchants who have discounted me already as he/she is leaving his margins
Recently I encountered a problem with planet health I purchased a medicine worth 48rs at midnight 1 or 2 and he refused to swipe card giving a lame explanation that below 100rs we would be charged with some charges so the head office has asked us not to swipe card below 100 rs

Happy to hear a merchant doing this instead of giving para long excuses of why he charges customers while trying to be the good guy

 

[shashankrt]

This is the mindset that has lead us into this.

Online or offline, these charges exist.

Now the problem lies here: most of merchants are using third party payment providers for their website. They do not develop or maintain such systems.

How do you think these private payment gateways make money? They still have to pay that MDR when processing card transactions and on top of that they have to maintain their systems and staff. That's their business, just like PayPal or anyone else, they facilitate a payments platform solution so merchants don't have to deal with any of nuisances of handling transactions themselves.

As for the merchants passing those fees onto customers when using a credit card terminal, what have they done or have to maintain? Nothing. Usually PoS/card terminals are issued at no cost, minimal cost, or on contractual terms (ie amount of money transacted).

What do these merchants gain? People will have higher spending power and will be less hesitant to purchase more or buy on EMI.

If someone is so pity to try to pass on those fees, take your business elsewhere.

There's no other solution, us as consumers have the power to change this as well.
Do not condone this type of behavior if you want to see change, let them know your mind and if they won't budge, screw them. There's plenty of other businesses out there.

No - Both POS terminals as well as payment gateways have costs. POS terminals are not free!!

You are justifying fleecing here. Basically a merchant who does not want to pay MDR will just move to online gateway AND CHARGE MORE in the name of convenience charges.

 

[gurbina]

No - Both POS terminals as well as payment gateways have costs. POS terminals are not free!!

You are justifying fleecing here. Basically a merchant who does not want to pay MDR will just move to online gateway AND CHARGE MORE in the name of convenience charges.

Just to clarify as it might not be clear...

The terminals are often given leased for free. The transactions themselves are NOT free!

The MDR is charged on both online and offline transactions. Even when you develop your own payment gateway or credit card terminals you'll still incur into those fees.

 

[Deleted member 11974]

does anybody know the registerd name for simpl pay later ?
unable to find it in the rbi ombudsman list

 

[anonymuos]

Just today I bought jewelry worth ₹30000 at a shop. The merchant said if I want to pay by card, the MRP is ₹30600 and if I pay by UPI, the MRP is ₹30000. So the 600 is being taken as part of MRP itself, not as MDR or card charges. Surely the bank won't reverse or reimburse those. I was angry so I said ok I will pay via UPI but paid via Tata Neu Infinity using Neu app to get 450 Neucoins which I will use on BigBasket or 1mg.

Where do I complain exactly about merchant charging extra price without showing it as card MDR charges?

 

[Vasuki]

added an example for clarity.

Yeh karnama car dealer k sath krte tb banta na example