Pay through ICICI Credit Card to attract 1% fee. | Techno Glob

“Dear Customers, Effective 20-Oct-22, a 1% fee will be charged on all rental payments made to your ICICI Bank Credit Card.”

Do you own an ICICI credit card and receive such a message? Cred RedGiraffe, Mygate, It is aimed at cardholders who use their credit cards to pay house rent through platforms like Paytm and Magicbricks.

So far, no bank or credit card company has charged a fee. ICICI Bank is the first bank to charge rent through its credit cards and others are expected to follow suit.

What have you paid so far?

The tenant enters the landlord’s bank account details or UPI (Unified Payments Interface) address under the recipient option on the platform and completes the transaction with his credit card.

Platforms that facilitate such transactions charge a convenience fee of 0.46-2.36% for each transaction. This convenience fee acts as an alternative to the MDR (Merchant Discount Rate) that online platforms charge merchants for using a user’s card services to accept bill payments. Because the merchant in the rent payment feature is a landlord who will not be charged for receiving rent. Platforms charge users a rental fee in the form of a subscription fee.

A 1% fee charged by ICICI Bank is payable in addition to the transaction fee charged by the online platforms.

Why this fee?

Even if the fee is not labeled, the bank may confirm the reason for the fee. This could be a way to prevent abuse of the rent payment feature for credit operations.

Industry experts point out that customers add their family or friends as hosts on these platforms and transfer funds to their bank accounts to convert into cash at no extra cost. ATM withdrawal fees using a credit card range from 2.5-3% of the withdrawal amount.

RedGiraffe is banned. Rent payment via credit card feature can be easily misused as they do not ask for rental agreement to validate the authenticity of the transaction.

“This charge was introduced to stop the cycle of debt through fake rents. In the past, banks levied a surcharge of 0.25-1.8% on train ticket bookings and fuel payments through credit cards to clamp down on similar practices, Delhi University said. Kashif Ansari, Assistant Professor, Hansraj College said.

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