If you regularly use credit cards for shopping, the chances are that every once in a while, you have been asked to shell out an extra 1% or even 2% at POS (Point of Sale) counters for using your card. Before even getting into the details of why merchants do this, what you need to know is that this practice is definitely wrong and that there are RBI regulations that allow penalizing such merchants by blacklisting them.
How do POS Machine Charges Work?
When you swipe your card on a POS machine, the merchant has to pay a small percentage (about 2%) as rental fees to the bank for using the POS machine. Ideally, these charges are to be borne by the merchant as a part of the cost of running the business, and in particular, for having the convenience of taking payments through a POS. But some merchants try to recover this charge from customers.
In the RBI's own words: "…merchant establishments levy fee as a percentage of transaction value as charges on customers who are making payments for purchase of goods and services through cards. Such fees are not justifiable and are not permissible as per the bilateral agreement between the acquiring bank and the merchants…"
RBI adds that any such instance can be used as a strong argument by the bank to terminate its POS-linked relationship with such merchants.
Key Features & Benefits of Digital POS Services
- Mobile checkout has become easier with the availability of mobile applications for point of sale (POS) systems.
- Most POS in credit card systems cater to both Apple and Android platforms, allowing retail staff to ring up purchases anywhere in the store or servers to take orders and payments at the table.
- While some POS systems are exclusively for Apple or Android, it's essential to choose one that meets your platform preference.
- Inventory management, customer management, and loyalty programs are additional features that can be incorporated into a POS system, depending on your business needs.
- Advanced systems can even personalise coupons and offers for customers at the checkout counter.
Why Merchant Is Not Liable To Ask For Credit Card Swiping Charges?
Nowadays, with the proliferation of POS machines and ATMs, people do not generally carry a large amount of cash when they go shopping. In this scenario, it works to a merchant’s advantage to have a POS machine installed. When a shop let’s their customers pay using cards, it sells more than what it would have with only cash purchases. Technically, merchants can accept cheques, but they hardly do, because of the fear of these cheques being dishonoured. So, even if we were to keep RBI regulations aside for a moment, common sense says that having a POS machine is in the best interest of the merchant. When a customer uses credit cards or debit cards, the merchant is assured of getting his money immediately after the transaction is approved.
Therefore, in an ideal scenario, it is clear why the merchant should not be charging customers for using the POS machine. However, we do not live in an ideal world. There are cases when a merchant tries to pass on the 2% expenditure to the customer, even at the risk of getting the business blacklisted by the bank.
What would you do if you have to buy something urgently and do not have cash in your account to withdraw from a nearby ATM? Chances are that you would give in to the merchant’s demand for a 2% fee for using your card. The best option for you in such a situation would be to tell the merchant that you are aware of RBI’s regulations and can make a complaint with the bank to get the merchant blacklisted. If the merchant is ready to reduce the charges, then you might be willing to pay a small fee to go ahead with the transaction. In most cases, this would work, as the extra charge would be shared by you and the merchant. However, if the merchant is already earning a high margin and still charging you for a card payment, it is only right for you to refuse to pay the extra amount.
The next time a merchant asks you to shell out that 1% or 2% extra for card payments, rest assured that you can tell the merchant that you are well aware about the RBI's notification on Credit Card transactions at POS'and will not be taken for a ride.
FAQs
Banks charge this to the merchants for each transaction. The contract with the bank depends on business size of the merchant as well. Merchants charge it to customers when they don't have significant number of card transactions/profit to cover that additional 2%.
What is POS charges in Kotak Mahindra bank? ›
| Particulars | | Standard Charges |
|---|
| Low throughput charges (Not Applicable for Bharat QR) | Zero transaction | INR 499 per month |
| > 0 and <= INR 10,000 per month | INR 249 per month |
| > INR 10,000 and <= INR 25,000 per month | INR 149 per month |
| Lost terminal charges (Per TID) | GPRS/PSTN | INR 6000 |
18 more rowsA Point-of-Sale (POS) limit determines the amount of money that can be spent using a debit or credit card in a single transaction at a merchant's POS terminal.
What percentage does POS take from transactions? ›
Razorpay POS Machine Charges: Lifetime Plans
| POS |
|---|
| Android Smart POS | Android Smart Mini POS |
| Grocery/Supermarket | 1.30% | 1.30% |
| Utility, Govt., Education, Fuel, Insurance, Transport | 1.00% | 1.00% |
| Others | 1.75% | 1.75% |
11 more rowsJul 15, 2024
A point of sale transaction is a payment for goods or services, usually made in a retail setting. POS transactions can be conducted in person or online. A business uses a POS system to process card payments or other forms of electronic payments at a physical location. A POS setup includes both hardware and software.
Are there any charges for POS transactions? ›
POS machines that facilitate credit card, debit card, UPI and other non-cash payments involve a fee. The acquiring bank charges this Monthly Discount Rate from the merchant, often as a percentage of the transaction value paid by the customer.
Does Kotak charge for transaction? ›
Note: All domestic / international Non Kotak ATM transactions will be chargeable for Easy Pay Debit Card (Rs. 20 per domestic financial transaction, Rs. 8.5 per non-financial domestic transaction, Rs.
What does POS mean on bank charge? ›
A POS or “Point of Sale” transaction is a purchase made with your Visa debit card and you are required to enter your PIN on a keypad. POS transactions post to your account immediately. On your statement, a POS transaction will show the amount and the address (and sometimes) the name of the merchant.
Is POS transaction safe? ›
Yes, PoS system transactions are generally safe. Modern PoS systems use advanced security measures such as EMV chip technology, encryption and tokenisation to protect sensitive card information. However, businesses must remain vigilant and invest in robust security measures to mitigate potential risks.
What is POS payment limit? ›
The POS limit on your debit card is like a spending cap. It's the maximum amount of money you can spend in one go when you swipe your card at a shop or restaurant. These kinds of transactions are known as POS or 'Point of Sale' transactions.
It directed DMOs to ensure that weekly over-the-counter (OTC) cash withdrawals by individuals and corporate entities do not exceed N100,000 and N500,000, respectively. “The maximum cash withdrawal via point of sale (PoS) terminal shall be N20,000 daily.
What is the maximum credit card merchant fee? ›
Credit card surcharges can't exceed the cost of accepting the card or four percent, whichever is the lower amount, even if it costs the business more than that amount to process your credit card payment. Convenience fees work similarly as they are meant to help a business cover processing costs.
Can bank trace a POS transaction? ›
Yes, POS transactions can be traced through various means such as transaction logs and receipt records.
What percent do POS systems take? ›
POS costs at a glance
| POS system components | Typical price range |
|---|
| Software | $29 – $300 |
| Hardware | $0 – $2,000 |
| Installation | $0 – $700 |
| Payment processing | 1.5% – 3.5% per credit card transaction |
1 more rowOct 14, 2022
Kindly note that when a POS transfer is declined, the money is reversed back to the account of the sender.
Why is there 2 charges on my debit card? ›
If you spot a duplicate charge on your bank statement after payment, it's likely an authorization hold, rather than a double transaction. These holds are temporary and usually resolve automatically.
Why am I being charged twice on my credit card? ›
Certain merchants, such as internet companies, may authorise a charge when you place an order. The merchant may then authorise your Card again when the amount is due. In these instances the charge may appear twice in Pending Transactions but will be billed to your Account only once.
Why am I getting charged twice on my debit card? ›
Your first step is to contact the merchant you made the purchase with and dispute the transaction. Most errors are down to human error or a connection error on their system. This can result in the purchase being processed as two separate orders meaning you could receive your items twice.
Why do I have 2 interest charges on my credit card? ›
Some cards have multiple interest rates, such as one for purchases and another for cash advances. Your credit score can affect the interest rate you'll pay as well as which cards you may qualify to use.
