Important news has come out for those who use credit cards. NPCI i.e. National Payment Corporation of India is going to increase the interchange fee for Rupay credit cards from May 1 next month. This change will apply to both domestic and international transactions. This decision may increase the burden on small traders, which may indirectly affect the pockets of customers. It is very important for every person using a Rupay credit card to know what this interchange fee is and how it will affect you!
New rates will be applicable from May 1
According to the circular, the interchange fee of all variants of Rupay credit cards, such as Classic, Platinum and Select, is going to increase. 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 this cost burden to consumers, which may affect their expenses. Usually, the interchange fee is paid by the acquiring bank to the card issuing bank.
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How will it affect the common man
The 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 i.e. you have to pay this interchange fee? So the answer is – no. This interchange fee is not directly levied on the consumer, but it is paid by the merchant’s bank (acquiring bank) to the card issuing bank every time a customer uses a debit/credit card to purchase from the merchant’s shop.
That is, this charge is not directly levied on the customer, but the merchant adjusts it in his margin. But as this charge increases, it is likely that merchants will pass on this expense to consumers, which will ultimately put a burden on your pocket.
What is the current interchange fee
Experts say that the interchange fee on existing credit cards is not fixed. Currently, it depends on the combination of the category of merchant and the category of credit card. 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 like 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 fee is usually levied on the Travel Category, which ranges between 1.7% to 1.8%.
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