HYDERABAD: Retailers levy service charge to lighten the burden imposed on them by banks and payment gateway operators.
The vigorous push being given by the government to digital transactions is being exploited by retailers who are charging customers ‘service charge’ for digital payments. Retailers have adopted this practice when payment gateways and card swipe merchants have started levying transaction charges.
A few retailers also levy service charge for card payments through PoS (Point of Sales) machines.
“Earlier we never used to charge customers for making digital payments but since Paytm started levying transaction charges, we are left with no choice but to pass on the burden to customers,” said Mohammad Amjad, owner of Green Mini Mark Supermarket at BS Maqta in Begumpet.
“Paytm wallet has a limitation of holding just Rs 20,000 and we reach this amount in a few days and thus have to transfer money from Paytm wallet to the bank account almost every week. This eats into our profit, forcing us to make up for that loss,” he explained.
The supermarket charges a customer Rs 2 to Rs 5 for using Paytm. The payment gateway app initiated transaction charges two months after demonetisation was announced on November 8 last year. The company charges 1.99 pc transaction charge and 0.30 pc service charge to all its merchants.
Raziya Begum, who runs a kirana store in Begumpet, had applied to a local bank for a PoS machine. However, she decided against using the machine. “The bank asked us to open a current account but it will be hard for us to maintain a minimum balance of Rs 10,000 at all times as we don’t earn that much,” she said. Raziya, however, uses the Paytm payment gateway and charges her customers Rs 2 to 5 per transaction.
The mandatory opening of a current account and maintenance of a minimum balance has as as a speed bump for retailers who are willing to accept digital payments. This has pushed many retailers to swiping machine dealers such as M-swipe and Swipay who too, like payment gateway apps, charge transaction fees but do not demand holding of a current account.
“My M-swipe is attached to my zero balance savings bank account,” said Mohammad Siddiq, a poultry shop owner at Begumpet. I don’t earn enough to keep a minimum balance in current account and the 2.1 pc transaction fee charged by M-swipe is high.
So, I charge 5 pc of the value of transaction carried out using the PoS machine. Thus I make up for the rental charges for the swipe machine and the transaction charges, he added.