Credit Card Fee: Interchange fee is the charge that the merchant’s bank pays to the bank that has issued the card. At present, it depends on the combination of the merchant’s category and the credit card category.
Credit Card Fee: If you also use a credit card, then this news is for you. NPCI i.e. National Payment Corporation of India is going to increase the interchange fee for Rupay credit card from May 1 next month. This will be applicable on both domestic and international transactions.
According to the circular, all variants of Rupay credit cards, such as Classic, Platinum and Select, are going to have an increase in their interchange fee. GST will also be levied on this interchange fee based on a multiplier of 1.1092. After this change, small merchants may have to pass on the cost burden to consumers, which may affect their expenses. Because usually the interchange fee is paid by the acquiring bank to the card issuing bank.
What is interchange fee?
Interchange fee is the charge that the merchant’s bank pays to the bank that has issued the card. Now the question is, does the common man have to pay the interchange fee? So the answer is – no. This interchange fee is not directly levied on the consumer, i.e. you, but is paid by the merchant’s bank (acquiring bank) to the card issuing bank every time any customer uses a debit/credit card to make a purchase from the merchant’s store to process the transaction.
That is, this charge is not directly levied on the customer, but the merchant adjusts it in his margin. But when this charge increases, it is possible that the merchant passes on this expense to the consumers.
How much is the interchange fee at present?
Experts say that the interchange fee on the existing credit card is not fixed. At present it depends on the combination of the merchant’s category and the credit card category. According to Ramakrishnan Ramamurthy of digital commerce business Worldline India, the current interchange rates of RuPay credit cards are at par with other payment networks such as MasterCard and Visa.
According to Ramamurthy, currently on an average RuPay credit card has an interchange fee of around 1% for utility merchants and 1.7% for most transactions on e-commerce platforms. The highest interchange fees are usually levied on the travel category, which ranges between 1.7% and 1.8%.
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