CONRWA wants transaction-fee waiver on card swipes
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CONRWA wants transaction-fee waiver on card swipes

To push cashless transactions, the resident body appealed to Finance Minister Arun Jaitley and Prime Minister Narendra Modi to make the use of credit and debit cards hassle-free.

CONRWA wants transaction-fee waiver on card swipes

In keeping with the rise in use of plastic money across the country, the Confederation of NCR RWAs (CONRWA) demanded an all-time waiver on transaction fees levied by banks on electronic payments.

On December 5, the resident body wrote to Finance Minister Arun Jaitley about this. Copies of the letter were also sent to Prime Minister Narendra Modi and RBI Governor Urjit Patel.

In the letter, PS Jain, CONRWA president, wrote, “You are pressing for cashless payments in the nation and have launched several schemes prompting citizens to opt for digital payments. Our prime minister has also appealed to the nation to switch to electronic modes of payment. But the provision of MRD, or Merchant Rate Discount, under which banks charge 0.25 per cent on each transaction up to Rs 1,000, and 0.5 per cent on each transaction up to Rs 2,000, deters people from using cards. Though the bank charges it from users of electronic-payment infrastructure, or outlets owners, it is ultimately the customers who shoulder the burden of the transaction fee.”

The demand assumes particular significance now, as the temporary waiver on electronic payments through debits cards is likely to end on January 7, 2017.

Jain, a lawyer by profession, further argues that it is not possible to make small payments by cheque, so customers are left only with the option of making payments through debit cards, internet banking and mobile wallets so as to not attract a direct credit charge, as in the case of credit cards. However, shopkeepers indirectly collect the 2-2.5 per cent transaction fee from them. That, Jain adds, "is illegal".

He further argues that customers also pay an exorbitant credit charge of 2.5-3 per cent on every credit card transaction. In case of delay in payments, the banks again charge a very high late fine or finance charge from customers. 

Jain opines, “The provision of finance charge should have been abolished a long time back, as the rule was formed more than a decade ago when credit card use was not that popular.”

To make credit card use more customer-friendly, he feels the government should reduce the late fine, if not abolish it, and also bring down the credit charge on transactions from 2.5-3 per cent to 0.5-1 per cent.