The Reserve Bank of India has issued important clarifications regarding credit card transaction charges, stating it has not issued specific instructions regarding the levy of charges on credit card transactions. According to reports from Mint, card payments are governed by agreements between merchants, banks, payment providers and card networks, with the RBI emphasizing that customers can question charges and raise matters with their card issuer if necessary.
When customers use credit cards, merchants incur fees known as the Merchant Discard Rate (MDR) for accepting payments. As reported by Mint, the entire transaction amount does not simply transfer from merchant to customer's bank, as card payment processing involves multiple participants including card-issuing banks, acquiring banks, payment providers and card networks. Some merchants attempt to recover these costs by adding percentage charges to customer bills, with the 2% surcharge being a common example of this practice.
The regulatory framework differs significantly between debit and credit cards, according to Mint reports. The RBI has issued specific directions covering MDR on debit card transactions, requiring banks and payment participants to ensure merchants do not pass debit-card MDR on to customers. While both card types may be processed through the same payment terminal, their regulatory positions remain distinct under current frameworks.
Customers may encounter convenience or service fees when booking tickets or paying for online services, as reported by Mint. The RBI's directions state that convenience fees applicable to specified transactions should be disclosed transparently before completion. Payment aggregator rules also require charges other than product or service prices to be clearly displayed before payment, requiring consumers to verify final amounts carefully before entering PINs or approving transactions.
When merchants add surcharges, customers should verify the additional amount and final bill amount before completing transactions, according to Mint guidance. If customers believe they have been wrongly charged, they can first raise the issue with the merchant and card issuer. The RBI states that if cardholders are dissatisfied with issuer responses or do not receive responses within one month, they can approach the RBI Integrated Ombudsman Scheme for resolution.
