Yes Bank and IDFC First Bank have recently said that if the utility bill is paid through credit card, customers will have to pay an additional charge of 1 percent. 18% GST will also be applicable on this
Extra charge will have to be paid on payment of utility bill through credit card. Recently, Yes Bank and IDFC First Bank have announced that they will charge an additional fee of 1 percent on utility bill payments through credit cards. This rule will come into effect from May 1, 2024. However, this extra charge will have to be paid only on bill payments whose value exceeds a certain limit. In the case of Yes Bank, this value is Rs 15,000, while in the case of IDFC First Bank it is Rs 20,000.
Extra charge on payment of value above a limit
This means that if a person holding a Yes Bank credit card pays a utility bill of Rs 15,000 through the card, then he will not have to pay this extra charge. Similarly, if the bill exceeds Rs 15,000, an additional 1 percent charge will be levied. Also, 18 percent GST will be levied on it. This was not the situation earlier. Earlier, there was no extra charge on the payment of utility bill. Also, good reward points were available on utility payments. The question is then why did banks start imposing extra charges?
What is the reason for imposing extra charge?
The utility category is a low-margin category. This means that banks get relatively less money from MDR/interchange fees. MDR varies according to category. Payment gateways generally offer discounts on MDR fees on categories like education, grocery and utilities. Due to this, banks get less money as intercharge if the customer uses his card for payment.
Use of card for business utility payment
Many business people use their personal credit cards to pay for utilities related to their business. The utility bill of a family generally does not exceed Rs 10,000-15,000 every month. But when the utility bill of the business is paid, this amount crosses lakhs of rupees. Banks offer higher rewards on personal credit cards than business credit cards. In such a situation, the bank faces difficulty in giving more rewards on business transactions.
What you should do?
Therefore, if you do not have any such business and you use the card only for family bill payment, then you do not need to worry. If you are a business person then it would be better for you to get a business credit card.
