IRCTC bars card payments from several banks over fees squabble
22 Sep 2017
Indian Railway Catering and Tourism Corporation (IRCTC) has barred many banks from using its payment gateway for debit cards transactions as these lenders refused to share the convenience fees charged from customers with IRCTC, reports The Financial Express.
Bankers FE spoke to explained that IRCTC had stopped them from operating on the website because they were unwilling to share a portion of the convenience fees earned on transactions.
The Indian Railways subsidiary's website is among the busiest portals in the country. The IRCTC website now allows payments only for cardholders of Indian Overseas Bank, Canara Bank, United Bank of India, Indian Bank, Central Bank of India, HDFC Bank and Axis Bank.
Earlier this year, IRCTC had asked banks to share with it half the convenience fee that lenders recover from card transactions on the website. The Indian Banks' Association (IBA) is understood to be discussing the issue with IRCTC and the Indian Railways to resolve the matter.
After demonetisation, IRCTC had waived the Rs20 convenience fee it charged from customers. However, it expected banks to share a part of the convenience fees that they charge to customers for making online purchases on tickets, etc.
Earlier, IRCTC asked banks to share half of the convenience fees collected by lenders.
''Every day we are losing 50,000 transactions,'' a senior executive with State Bank of India (SBI) told FE. ''Normally, the merchant pays the acquiring bank. But since IRCTC does not pay us, we were recovering our costs from customers,'' he added.
The banks which refused IRCTC's demand argue that the demands violate the principles of the merchant-acquiring business.
For railway ticketing and other passenger service transactions, the RBI guidelines, which were issued on 16 February, the transactions would attract a flat fee of Rs5 for transaction values between Re1 and Rs1,000 and Rs10 for transaction values between Rs1,001 and Rs2,000. Above Rs 2,000 will attract an MDR of 0.5 per cent, with a cap of Rs250 per transaction.
Ticket buyers can pay via e-wallets for their bookings which do not charge any convenience fees to the parties.
