New Delhi: The coronavirus pandemic has spurred the purchase of products and services. But with the convenience of digital payments, there has been a common consumer complaint of high convenience charges levied by various service providers for online transactions, which LocalCircle has been receiving in the last 12 months.
A convenience fee is a fee that consumers pay to digital service providers for a service or facility offered by them, which may be for electricity, broadband, railway tickets or air tickets. IRCTC, a railway ticketing website under the Ministry of Railways, charges a convenience fee of up to 10%. Similar charges are levied for booking movie tickets online, safaris on state government websites or paying school fees.
Consumers using credit cards have to pay additional charges levied on merchants by banks and network providers who in turn pass it on to the consumer.
Taking note of the issue of convenience charges being levied for several services, LocalCircle conducted a nationwide survey to understand the consumer’s pulse on the convenience charges charged by digital service providers offering online services. It also sought to know from consumers whether they felt that the government should at least eliminate such charges for the government and its related entities and limit it for private entities. The survey received over 30,000 responses from 344 districts in India. About 65% of the respondents were male while 35% were female. 46% respondents were from Tier 1, 34% were from Tier 2 and 20% respondents were from Tier 3, 4 and rural districts.
77% of consumers said they are being charged for most of the services they book online
Many ticketing or services purchased online require consumers to pay a certain fee as a convenience fee, specifically for booking the ticket. On questions of consumers’ experience with convenience fees in the last 12 months, 38% said they were charged “convenience charges for all services purchased online”, 39% said “convenience charges for most services purchased online”. “, and 18% was a “convenience fee charged only for certain services purchased online”. There were only 2% of consumers who “never charged a convenience fee for services purchased online”, while 3% could not. The survey results indicate that 77 per cent of consumers are being charged convenience or service charges for most of the tickets or services they book online.
75% of consumers pay a convenience or service fee, although they decline it
In some cases a facility or service charge is levied to cover the IT cost. In other cases, in addition to internal IT costs levied as facilitation fees, an additional amount is charged to cover costs that businesses pay to payment processing companies when a customer is using an electronic or digital payment mechanism. Pays using The fee is typically a fixed amount or percentage of sales, which varies from company to company. About 75% of consumers said they “pay unacceptably”, while 15% said they “pay happily, at least I don’t need to stand at the counter”.
93% of consumers want the government and public sector undertakings to stop charging facility or service charges and promote Digital India
Consumers have also complained that in many cases this convenience fee is charged per person and not per transaction. This means that if a person is booking tickets for three passengers in a single booking, they will be charged per passenger convenience fee. Citizens on the LocalCircles platform have reported that government affiliated sites like IRCTC, Power Corporation etc. also charge a fixed fee as convenience fee while booking tickets or making online payments for services.
There have been several suggestions in the past that the Indian government should prohibit levying any convenience fee and other charges on the use of any digital mode of payment to a merchant, which in turn boosts its effort to promote a cashless or digital India. can give. In the following question, in which consumers were asked whether the government should abolish the convenience fee for services sold by the government and its PSUs or for online booking of tickets, 93% answered “yes”. However, 4% of consumers said “no”. , while 3% could not say. According to the survey, this question received 7,448 responses in the survey.
Most of the consumers want the facility or service charge to have an upper limit as to the absolute value 50 or 0.5% of the transaction value
Currently, there are no rules in India to regulate convenience fees, such charges are left to the discretion of the digital service providers. Consumers say that most service providers add convenience fee just before checking out or making final payment and don’t share it first. The last question consumers were asked was how the convenience fee for online ticketing and service purchase should be controlled. In response, 63% said that it “should be defined as an absolute value with a max. 50”, while 30% want it to be “limited at 0.5% of the transaction value”. Only 3% said “do not take any action and let service providers decide” while 4% could not. Conclusion Point out that most consumers want a facility or service charge to have an upper limit as an absolute value. 50 or 0.5% of the transaction value. The question got 8,082 responses in the poll.
In community discussions over the past 12 months, many consumers have been expressing how at times they have avoided doing cashless or digital transactions because of these charges. Whether it is going to school to drop a fee check instead of paying digitally or paying a check to a travel agent instead of paying with a credit or debit card, there are plenty of examples.
Undoubtedly, India has witnessed a rapid growth in digital payments in the last 6 years since demonetisation. The pandemic has further accelerated the adoption of digital payments. However, there is still a long way to go. In most Tier 2, 3 and 4 cities, digital payment is still not the primary mechanism for payment, it is cash. If India is able to implement some of the proposed changes i.e. removal of convenience fee for digital payments relating to any central or state government including affiliated entities like PSUs, IRCTC, etc. and facility levied by private entities on digital transactions Let’s find a way to cap the fee. According to the survey, this can go a long way in driving digital payment transactions, which can take us towards a cashless India.
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