Westside charges ₹49 for credit card payments: Is it legal?
What's the story
Westside, a leading retail chain, has come under fire for charging a flat "convenience fee" of ₹49 on all in-store credit card transactions. The policy was highlighted in a notice at the store, which read: "A convenience fee of ₹49/- shall be charged on all credit card transactions in-store." This has sparked outrage among shoppers who have called it an unfair practice.
Customer backlash
UPI, debit card, and cash payments exempt from the fee
In response to a customer's concern over the fee, Westside clarified that the charge could be avoided by opting for UPI, debit card, or cash payments.
However, this clarification didn't stop the online uproar against the retail giant.
Many netizens have slammed the move as a "cheap tactic" and questioned its fairness.
Expert opinions
Legal experts weigh in on credit card charge
Legal experts have weighed in on the matter, noting that while the Reserve Bank of India (RBI) prohibits merchants from passing on Merchant Discount Rate (MDR) to customers for debit card transactions, there is no such prohibition for credit cards.
However, they also pointed out that a flat ₹49 fee could be legally vulnerable if imposed after purchase commitment or misleadingly described.
Fee distinction
Retailers can't validate prohibited charges by calling them 'convenience fees'
A real convenience fee is applicable to a payment method "not ordinarily used by the merchant," while MDR is a standard cost for commonly accepted payment methods.
Passing MDR directly to customers is essentially a "payment surcharge," Rahul Hingmire, Managing Partner at Vis Legis Law Practice, said, stressing that retailers cannot validate prohibited charges "merely by describing ₹49 as a 'convenience fee.'"
Legal recourse
Customers should immediately request removal of the charge, expert advises
If customers are charged this fee at the billing counter, legal experts advise them to object immediately.
"Customers should immediately request removal of the charge and an explanation of its basis," Hingmire said.
He also stressed that "itemized bill, payment receipt and displayed fee notice" must be preserved for filing a formal complaint with the card issuer or acquiring bank.
Consumer protection
Retailers imposing undisclosed charges could face legal action
Tushar Kumar, Advocate at the Supreme Court of India, noted that imposing an undisclosed charge at the point of payment could amount to a "materially misleading representation of the transaction price," which attracts scrutiny under the Consumer Protection Act, 2019.
"The aggrieved customer may approach the National Consumer Helpline and, where warranted, institute proceedings before the competent Consumer Disputes Redressal Commission," Kumar said.