Credit Card fees: From May 1 i.e. tomorrow, paying bills through credit cards is going to be expensive for the customers of two private banks. This includes Yes Bank and IDFC First Bank. Banks are doing this due to misuse of personal cards by customers and lower MDR.
Credit Card fees: There is important news for the customers of Yes Bank and IDFC First Bank. From May 1, customers of these banks will have to pay more amount to pay utility bills. Sources say that due to misuse of personal cards by customers and lower MDR, some other banks may also follow this decision in the coming days. MDR refers to the fee that payment gateways charge businesses for each credit card transaction.
Yes Bank and IDFC Bank recently announced that they will charge a new fee of 1 per cent on credit card bill payments. That is, if your electricity bill is Rs 1,500 and you pay with the credit card of Yes Bank and ICFC First Bank, then you will have to pay an additional Rs 15. However, Yes Bank customers will have a free usage limit of up to Rs 15,000, while IDFC Bank customers will have a free usage limit of up to Rs 15,000. In case of Rs. 20,000 this amount will be Rs. That means, if you have a Yes Bank credit card, you will not have to pay any extra fee for utility bills of less than Rs 15,000 in the statement cycle. But if you pay a bill of more than Rs 15,000, you will be charged 18 percent GST along with one percent extra charge. The same rule applies to IDFC First Bank credit cards. However, the free usage limit is Rs 20,000.
Why did the fees increase?
The question is why banks are charging this fee. There are two reasons for this. The first reason is that the merchant discount rate i.e. MDR is low. MDR is the fee that payment gateways charge from companies on every credit card transaction. MDR varies in different categories. MDR in utility bill payments is lower than other categories. This means that when you pay utility bills through credit cards, banks earn less. There is also a fear that some companies may misuse personal credit cards to pay their business related utility bills. Generally, the utility bill of any household is less than the credit limit on the personal card. In such a situation, companies can take advantage of it. This will be curbed by extra fees.
