Are you in the habit of swiping your debit card whenever you make a purchase? If yes, how often have you ensured that the merchant establishment has not levied a fee on your debit card transactions?

Most people, it is learnt, are quite unaware of the banking regulator’s circular on this levy. While some establishments tell the customer they would be charging a 2 per cent fee on the transaction value if the settlement is made through card, others quietly collect the fee without informing the customer at the time of billing.

RBI circular

The Reserve Bank of India had in September 2013, issued a circular to the chiefs of all scheduled commercial banks (excluding Regional Rural Banks) and local area banks, in which it had categorically stated that “such fee is not justifiable and not permissible as per the bilateral agreement between the acquiring bank and the merchants”.

The regulator had advised banks to desist from such practice after taking note of instances of merchant establishments levying a fee for purchase of goods and services through debit card.

Almost two years have gone by, but the practice has not stopped. Taking objection to the levy, R Raju Srinivasan, a retired army officer, said, “I am shocked to note that merchant establishments are quite unaware of the RBI’s circular. So, I now carry a copy of the circular as the billing clerk in most establishments is either not informed or feigns ignorance when collecting the extra fee.”

Srinivasan, in fact, took up this issue with the Consumer Education and Protection Department of the RBI. The department in turn forwarded the complaint to his banker, ICICI Bank. Responding to Srinivasan’s complaint, the bank said it does not charge 2 per cent on debit card transactions. “You might have been asked to bear the ‘Merchant Discount Rate’ by the merchant, which is a fee the merchant pays to the acquiring bank (for providing the terminal – Point of Sale – to the merchant).

This is a fee the merchant has to bear and not the customer,” the bank clarified, adding, “We have taken up the matter with the said merchant and they have assured that they will not collect extra charges for debit card transactions.”

While a few like Srinivasan voice their objection, other users seem to be ignorant of this levy and banks intervene only when the issue is raised.