Rent paid by way of ICICI bank card to draw 1% price

“Dear Customer, beginning 20-Oct-22, all transactions in your ICICI Bank Credit Card in direction of hire fee can be charged a 1% price.” 

Do you personal an ICICI bank card and have obtained such a message? It is supposed for cardholders who use their bank cards to pay home hire by way of platforms like Cred, RedGiraffe, Mygate, Paytm and Magicbricks, amongst others. 

So far, no price was being levied by any financial institution or bank card firm on such transactions. ICICI financial institution is the primary to introduce a price on hire funds performed by way of its bank cards and others are anticipated to comply with. 

What did you pay to date

Tenant provides the owner’s checking account particulars or UPI (Unified Payments Interface) handle below the recipient possibility on the platform and completes the transaction along with his bank card. 

Platforms facilitating such transactions cost a comfort price of 0.46-2.36% on every transaction. This comfort price acts as an alternative to MDR (service provider low cost price) that on-line platforms cost retailers for utilizing the consumer’s card providers for accepting invoice funds. Since the service provider within the hire fee function is the owner, who is not going to pay a price for receiving hire, platforms cost customers paying hire within the type of transaction price.

The 1% price charged by ICICI financial institution can be along with the transaction price that on-line platforms impose. 

Why this price

While the financial institution has not labelled the price that may confirm the rationale for it being charged, it may very well be a approach to curb the misuse of hire fee function for credit score rotation. 

Industry consultants have identified that clients add their household or associates as landlords on these platforms and switch cash of their checking account to transform it into money at no additional value. Fee to withdraw money from an ATM utilizing bank card ranges from 2.5-3% of the quantity withdrawn.

Rent fee by way of bank card function could be misused simply as all on-line platforms providing this facility, barring RedGiraffe, don’t ask for hire settlement to validate the genuineness of the transaction. 

“This price is launched to cease credit score rotation by way of bogus hire funds. In the previous banks have launched surcharges of 0.25-1.8% on prepare ticket reserving and gasoline funds performed by way of bank cards to repress comparable practices” stated Kashif Ansari, assistant professor, Hansraj College, University of Delhi.

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