The 2% Credit/Debit Card Fraud

Lets face it.. we all are victims of this scam. Most of the time when we use a credit card, the sales person grins and says he will be charging an extra 2% on the final billed amount. When you ask why the extra 2%? They happily say it is the credit card transaction charge. But when you protest, they say take the item or GTFO. Most people just agree to pay the extra 2% or they go to the nearest ATM and draw the money to save the 2%.

This incident happened with me on 28th Dec 2013 at “Kalyani Bajaj, Mathikere

I visited the place to get my motorbike Bajaj Avenger serviced. After the servicing was done, I was presented with the bill. I handed over my credit card for the payment and he informed me that he will be charging additional 2% of my billed amount on my credit card. This is how the further conversation took place

Me: Why are you charging me extra 2%, just because I am using my card?
Cashier: Yes, the bank charges us, we charge you.
Me: What? If Bank charges you , that’s your problem. Why are you pushing that charge to your customer? Its wrong and you are not supposed to do that!
Cashier: We do that to every billing, if you don’t want to pay by card you can pay by cash and we won’t charge the extra 2%.
Me: Then what’s the use of having a credit card? If I make all the payment through cash? The 1% cash back benefit which I get for holding the card is lost and I am paying another extra 1% for using the card? Does that make sense to you?
Cashier: It is our policy here, we charge 2% on all card payments.
Me: Then your policy is wrong. Are you even aware there is a specific RBI regulation which says Merchants shouldn’t charge anything extra for using the cards?
Cashier: Is it? Go bring that regulation.. Then i will not charge you the extra 2%.
(now I am pissed)
Me: Do you think I carry a regulation in my pocket all the time? It is your job to read that and apply it. Who wrote your policy? Call that guy i want to talk to him.
Cashier: (He calls his manager) Sir, this guy is protesting that he will not pay 2% on card swipe.
Cashier: The manager says you have to pay the two percent now, bring that RBI regulation and you can take the refund.
Me: Totally frustrated, FINE! i will get it and get my money back.
Cashier: Accepts the payment.

Now I have the bill with me and the amount charged on the credit card slip.  It was never about saving 2% money! It was about what’s right and what’s wrong!

I remember reading this article on Times of India . Where they had mentioned about this scam by Merchants. In the article they failed to link to the RBI website for particulars. So, I did a bit of Google to pull out these clauses from RBI website.

Levying fees on debit card transactions by merchants
Clause 4:

      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.

Credit cards and Debit cards :
Clause 4.18 :

In case of Credit Cards and Debit Cards there is no visible charge on the customer for use of cards at merchant establishments.

    Charges are levied directly on customers only at few locations like petrol stations etc. and for cash withdrawal at ATMs. In all other cases, charges levied by banks have been for the credit availed (beyond the due date). In credit cards and debit cards the interchange fees – the charges paid by the merchant are an integral part of the pricing structure of credit and debit card transactions. As this fee is levied on the merchant establishment, there is differential cost for the merchant for payment received by cards or cash. This serves as a disincentive for merchants to encourage payments by cards. This was observed as the reason why the use of cards for purchase of valuable items and goods continue to be discouraged by the merchants; if payments are made by cards the interchange fee is recovered from the customer. This is because, in case of larger value purchases, the merchants find it unremunerative to absorb this interchange fee.

I have taken printout of these documents and highlighted it so that these ignorants can read it better. This week, I am going back and I am throwing these print outs on their faces and get back my money.

Update 6th Jan 2014:

I went back to them with the printouts of the RBI Clause. Straight away I went to the floor manager and told him we need to talk. As soon as he realised I was back, he got defensive. He told, yeah we have the RBI document too.
He took me to the cashier who had the document, he showed me the document. It was the same document . He had underlined this part “Levying fees on debit card transactions by merchants” of the document. I told, there is also a paragraph under the heading, did you even read it ? I read it out loud to him, specially the part which read “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.” He looked blankly at my face, after he realised his stupidity.

Now, I asked him to call his Finance manager as I wanted to talk to him. He asked me to wait. I waited for around 15 minutes before they connected to me a call with their Finance manager. Initially I refused to talk to him on phone, I wanted to talk to him face to face. Later they told me he sits at different location, so I agreed to talk to him on the phone. This is how the conversation went further.

Me: Hello, this is regarding the extra 2% amount which you had billed me for. I am here to get it back and I have brought you the document which you asked for.
Finance Manager: OK, did you read the document which I had sent to the cashier.
Me: Yes, very much. In fact I have the same document and it clearly says “Levying fees on card transaction by merchants is not permissible”. Do you understand English?
Finance Manager: Yes, of course I do. What I meant was only on Debit card we can’t levy fee, but on credit card we can”
Me: This is why I wanted to meet you directly and talk face to face. Because I have another RBI regulation which says you can’t levy extra charges on credit card.
Finance Manager (Agressive): How do I know that document is authentic? What date is that document? It might be an old document.
Me: First of all keep your voice down, only if you were here I would have shown you the document. You sitting on another side and asking me to prove is dumb. Come over here and I will show you the document. Also, if you have a latest document which says you can levy fee show it to me. When the constitution was written in 1950 they mentioned “Right to speech” do you think they revise it every year? The last update is the Rule. Don’t you even know that? You expect the customer to tell you? Why are they paying you salary? Leave your job!
Finance Manager (Totally Pissed): I am the “FINANCE MANAGER” and I can’t come there to meet you.
Me (2xTotally Pissed): You might be the “FINANCE MANAGER” or the “FINANCE MINISTERI DON’T CARE. ALSO YOU ARE THE FINANCE MANAGER OF KALAYANI MOTORS NOT ME! FOR ME YOU ARE SAME AS THIS CASHIER OVER HERE. SO DON’T SHOW ME YOU “I AM FINANCE MANAGER” THING.
Finance Manger: If you had so much problem with card why didn’t you pay in cash. Card is another option which we give to our customers.
Me: If you give the option to use why do you charge 2% on it and if I have an option to use my card I will use it. Else what is use of carrying a card?
Finance Manager: That is your problem.
Me: That is not my problem! The 2% charges are on you and not on me. You pay the bank, don’t ask me to pay. Ok, do this thing, print me a bill which says additional 2% Credit card charges and I am ready to pay it! If you don’t mention the 2% on the bill, it’s the black money and I refuse to pay you unaccounted money. You fraud! Come in front of me and talk! or tell me where do you sit and I am coming over there you cheat. Tell me where do you sit?
Finance Manager, now he realizes he can’t win this argument as I countered every question of his with valid points. He asks me to hand over the phone to his sales Manager.
He asks the Sales Manager to refund my money.

I handed over the copy of RBI regulation and asked him to put it on notice board. Also asked him to make a copy and send it to their useless Finance Manager.

After hearing the conversation, the tone of the cashier went down. Surprisingly he started referring me as ‘SIR’. While returning I asked their “Finance Manager’s” Name and where he sits because I will escalate this. The Sales Manager said “Please leave it here since the issue is resolved”. I told him, do you think I fought for this 80 rs? It’s about consumer right and you can’t cheat me! For the records the Finance Manager’s name is Partha Sarathi. He sits at Kalayani Bajaj, Mekhri Circle. I am still deciding if I need to escalte this issue with the Banks and Kalayani Bajaj Management. But If I do, I will surely blog it out here.

Please do share this info with your friends, let us stop these scumbags from feeding on us.

Found another link discussing the same thing.

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101 thoughts on “The 2% Credit/Debit Card Fraud

  1. This had happened to me, I personally had to run to the nearest ATM to avoid the 2% charge while getting my car spares changed (Premji’s Tyre plus, Balkum Thane). Also, all Mobile Shop Owners run the similar fraud, I had found Bigg Boss, outside Vashi Railway Station charging 2.5% extra! Biaatch!! Please get the copy from RBI Website!

  2. Happened to me also. Autofin Honda at Uppal asked to get 2% extra amount or else he pointed to the ATM situated on opposite lane to get the money from there and pay him. I had no option rather than to go to ATM and withdraw the money and pay him.

  3. Same thing happened to me at a Samsung Service Centre and I asked them to put the extra 2% on the receipt and they wouldn’t do it. I said, i’ll raise it with Samsung HQ. When i raised it with Samsung HQ they were ready to put the extra charge on receipt. I didn’t bother to go and collect the new receipt!

  4. I request you to go ahead and escalate the matter!
    Its a matter of right and wrong here !Also thanks a bunch for sharing the documents.
    I have a small doubt on the clause 4.18:
    “This serves as a disincentive for merchants to encourage payments by cards. This was observed as the reason why the use of cards for purchase of valuable items and goods continue to be discouraged by the merchants; if payments are made by cards the interchange fee is recovered from the customer. This is because, in case of larger value purchases, the merchants find it unremunerative to absorb this interchange fee”

    They didn’t mention how large the transaction should be where the merchant can ask the customer to pay ?
    (I understood that we should not pay additional 2% while paying through credit/debit card, but just to clarify it)

  5. YOU ALL HAVE COMMENTED AS A CUSTOMER. NOW I COMMENT FOR THE MERCHANT. THE BANK CHARGES AMOUNT VARYING FROM 1% TO 2% DEPENDING UPON THE TURNOVER OF THE MERCHANT. NOW IT IS OKAY IF THE MERCHANT BILLS YOU GOODS ON MRP LIKE SAY LEVIS JEANS DEALER PRICE IS AROUND RS 700 TO RS 900 AND FOR CUSTOMER IT IS RS 1999 TO RS 2999. NOW IN THIS CASE THE MERCHANT WONT CHARGE YOU ANYTHING AS HE IS ALREADY MAKING HUGE PROFITS. NOW TAKE THE CASE FOR MOBILES DEALER PRICE RS 5850 MRP IS RS 6500 AND MERCHANT OFFERS YOU FOR RS 6000 OR RS 6100 HERE IF HE ACCEPTS CARD HE WILL BE LEVIED 2% IE AROUND RS100 TO 120 NOW HE WONT BE EARNING ANYTHING ON IT IF HE DOES NOT PASS ON THAT CHARGE TO CUSTOMER. IF YOU WANT THAT HE SHOULD NOT CHARGE THEN YOU SHOULD ALSO BE PREPARED TO PAY MRP PRICE. IF NOT THEN YOU WILL HAVE TO PAY THE CHARGE OR BUY IN CASH. WHEREVER THE PROFIT IS LOW YOU’LL HAVE TO PAY AND WHERE THE PROFITS ARE HIGH THE MERCHANT WON’T EVEN MENTION IT. SO YOU HAVE TO SEE BOTH THE SIDE OF THE COIN.

  6. Jeba,First of all let me thank you for the awesome effort you have put to fight for a right casue and the awareness it has generated among many people.
    I have tried this situation with almost all Bike dealers in my area Marathahalli be it TVS,Mahindra,Bajaj and Honda all are asking for 2% extra if I pay by Card,I told them it is illegal as per RBI regulation but they said we charge and if you want to buy you have to pay.
    The result I haven’t made intended purchase yet but your blog is an inspiration will surely fight it out so that these fellows don’t charge me extra 2%.
    Appreciate your efforts and I would say take it to next level may be escalate and get this in media.I wholeheartedly support your initiative.
    Rgds,
    Kapil

  7. Bravo man!! I have the same issue with electricity company, they are charging extra 10 Rs. on online debit/credit card or net banking payments.

  8. tvs showroom in innerring road domlur Bangalore is also charging 2% extra for the down payment of the jupiter scooter.. Hope tvs company looks into this issue.

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