[KartAttack]

Thank you fellow BHPians for your quick guidance and sharing your inputs, that gave me some clarity on how to handle this delicate yet a grey area. I just got my jeep delivered home & I did pay it through my credit card only. And also got the 2% charges waived off.

I told the service centre folks, I dont mind paying the 2% but then will give it as a strong feedback / escalation when i get the CSAT call on my mobile

The service manager then told me to wait. He made some calls & came back on line with me. He told that the additional charges have been waived off. I thanked him for his immediate resolution.

[Mr.Ogre]

When I was in India I hated this practice of paying 2% more while using credit card. I am not sure if this is legal in India.

But, when I came here, I can see that it is quite prevalent in Sydney. A lot of establishments including Government websites explicitly mention that they will charge extra if using card. I think it it legal here and it is on business establishment if they want to charge extra.

For example, ALDI, Woolworths, Coles are huge grocery chains like Big Bazaar. While ALDI charges extra on card payment, the other two don't.

[neeraj0272]

It simply means that the merchant doesn't believe that his profit margins are enough to pay 2% to card company. I will do business preferably with such dealers as I too don't want to give 2% profit to card companies for simply facilitating a financial transaction.
In the cut throat business, 2% is make or break
margin.
In fact you should ask your credit card company why do they charge such huge charge of 2% to the merchants which indirectly you are paying.
On the other hand if you are happy that card companies rightly deserve this 2% then you should also not complain about dealer charging this 2%.
Just keep in mind that if the dealer does not charge you this 2% separately then that means the dealer has incorporated this 2% in his MRP and other customers who pay by netbanking or cash will also be paying this 2% which is the convenience charge for credit card customers!

[true_sedan]

Originally Posted by KartAttack

When I told the service center I will pay through credit card, he responded saying he will charge me 2% extra on the bill value and is pushing me to pay through cash. I am surprised VTK Jeep is doing this.
Is this the norm with them. Any guidance here will help me, when I pick up my jeep in couple of days time.

This is totally normal. I use razorpay for my business and they charge me 1.5% for every successful transaction. I totally understand this because a transaction, though digital need computer servers to process them. Maintaining those servers and ensuring smooth operations require a lot of manpower. But I absorb those charges as operating cost and don’t pass it to the customer. To answer your question yes there is a transaction charge of 1-2% for cards but the decision to pass it to the customer is solely based on the retailer.

Transaction through UPI do not attract any charge as of now. Soon it’s about to change but it is a topic for another day. The dealer should be able to accept UPI payment without any added charges. Same goes for NEFT.

If they are still insisting on cash then there is some murky business going on there. Consumer invoices like yours are very different from businesses invoices. Whereas the dealer must report the business invoices when filing GST returns every month, there is no need to do the same with consumer invoices. He could be giving you an invoice and not reporting it to avoid paying taxes especially when he is ITC negative(meaning he has already claimed all tax from inputs). This is when they insist on cash payments as they have no digital record and can be kept away from the purview of the system.

[noopster]

Originally Posted by KartAttack

When I told the service center I will pay through credit card, he responded saying he will charge me 2% extra on the bill value and is pushing me to pay through cash.
Has anyone else faced this with jeep service centre? Is this the norm with them.

Not with Jeep, but when I bought my Ather earlier this year the dealer requested me to pay by cash/cheque/online payment since he would levy a 2% service charge on credit card. It was a bit of a last-minute decision for me to buy the bike so the credit card would have been really useful but he stayed firm. I checked with my friend who worked at Ather HQ and he told me dealers get a flat 7K or some such per booking and his entire commission would be wiped out if he entertained this request. I was totally put off but agreed.

Originally Posted by GTO

He is basically trying to get the MDR from you, which he would be paying. Used to see this a lot with small shop owners back in the day, but in today's digital India, I haven't come across the practice in a while.

I have paid for all my care services (Maruti, VW, Kia) with a credit card and it has never been an issue. This is probably a limited case for high value purchases since the MDR is substantial.

[low_rider]

The Government themselves charge extra for credit card transactions (Try IRCTC for train booking).
However, you can try paying through UPI (it's free). Also, once our domestic payment system (RuPay) becomes widely available, you can pay via RuPay cards without any transaction fees.

[WorkingGuru]

While card companies keep consumers busy counting points, the customer doesn't realise (/is indifferent to) the cost being included in the product price.

Businesses find the MDR of 2% just as significant as customers do, if not far more. Especially when there are options that don't involve any cost whatsoever - UPI, IMPS, NEFT, Cheque and ofcourse CASH!

These card companies are SO influential that they actively lobby the Govt in their home country to pressurise other governments into restrictions in other payment options that the Banking Industry regularly operates thru either for free, or at a very minimal cost.

Can only hope that people claiming they "hate" retailers who pass this cost to the customers do take a step back and look at the bigger picture. But that hasn't (& seemingly won't) happen.

[r24x7]

MDR charges were always meant for the vendor. For a private buyer it may be fine to pay up. But I always wondered how does a business professional who opts for a GST invoice account for these additional charges.

For instance, Invoice value is 1000/-, but payment made is 1020/- ( 2% extra). The accounting would simply not add up. On books, how would vendor show this payment receipt ? Neither the invoice is going to have full amount of 1020/- nor the payment is going to be for 1000/-.

Also, certain vendors negotiate with bank that MDR charges be capped beyond a certain limit per month so that the vendor need not worry about this charges holistically looking at the overall revenue volume in that month.

[true_sedan]

Originally Posted by r24x7

For instance, Invoice value is 1000/-, but payment made is 1020/- ( 2% extra). The accounting would simply not add up. On books, how would vendor show this payment receipt ? Neither the invoice is going to have full amount of 1020/- nor the payment is going to be for 1000/-.

That’s a good observation. Ideally the retailer should also provide a separate invoice for the transaction charges. It can obtained by the retailer from the payment gateway website(like razorpay, simpl, payu, Paytm, billkesk) but they don’t go to the hassle of getting one for such a small amount. In this case the consumer with the business bill will put it under miscellaneous expenses when filing tax.

[Artyom]

I have seen similar practices while using Amex cards. Fir normal cards they generally budge and dont charge anything additional. I am surprised brand like Jeep charging additional. All my services i have used non Amex cards and never being charged more. I think this is one odd case where either the service centre is not profitable enough to absorb the additional charge or they are just trying to take the customer for a ride.
Similar practice is also followed at SP road Bangalore where big shops like Golcha and all also charge additional 2 percent if you pay by any card.Not sure if it has changed recently but its prevelant.

[smungara]

I have the same experience with Bimal auto in Banaswadi Bangalore, when asked why? executive said after covid they are not accepting cards without any surcharge, he also advises me that I should withdraw from near by ATM and make payment if I am not interested to pay 2%. Now a days I started carrying cash whenever I leave the car for services, as I am against of paying extra.

[kiredd1005]

Yes they can. It is really up to the retailer whether or not he is willing to absorb the cost of the transaction. There is a grey area on this topic, some customers are willing to pay for the charges and some kick up a fuss.

As an individual, I am ok paying this 2% charge because maybe I use my credit card up to 8-10 transactions a month. Now imagine a business which might have 5-10 transactions a day, when you compound it annually, that is a massive cost to absorb.

I think it's only fair to pay the card charges and be done with it.

[AJ56]

As consumers, we need to understand the business never pays any fees/taxes itself. It will simply incorporate these charges in its pricing. Be it taxes or merchant fees on card use. The house always wins as the saying goes.

If you are not charged separately, it means the business has added these fees already to its pricing, and if cash/UPI customers are not given a 2% discount, it means everyone ends up paying the merchant card fees, irrespective of how they paid.

I will always prefer a business that makes it clear their pricing is independent of such merchant charges and if I pay with a card, it’s a convenience to me and I don’t mind paying as the business has to pay it forward, after covid people rarely use cards anyway, most prefer UPI as it’s touchless.

Will also add, 2.5% is huge. That’s 100% of the gross revenue of 1 client, every 40 clients.

[car-dent]

Whatever the profit margin, as per the merchant agreement, any seller is not allowed to charge anything "extra" for accepting credit cards. Except Petrol pumps and Govt establishments like electricity, railways,etc. They have different agreements and surcharge can be charged by them.

So while its a common practice by businesses with thin margins to charge extra 2% from customer, its completely illegal.

[dsuman]

Originally Posted by KartAttack

When I told the service center I will pay through credit card, he responded saying he will charge me 2% extra on the bill value and is pushing me to pay through cash. I am surprised VTK Jeep is doing this.

I used to own a Pharmacy till last year. We used to accept Card payments but the Bank used to charge us 2% extra on Credit cards and 1.5% on Debit cards for using their Card machine. Upon asking for Waiver they refused since the Machine is given free of cost. Minimum charge is 0.5% but that is applicable when a Threshold of payments received (for us it was 15 lakhs per Month) is reached per Month.

We used to absorb the cost and not charge the customer for Card Payments. So I wont find fault with the Jeep Dealer. They may wish to waive off this 2% but then they may also not.