Payment Options and its ramifications for an Individual Customer (read Common Man)
Disclaimer:
At the outset, let me clarify this post is relevant ONLY to common man who is an individual customer (not an Enterprise or Shop or Body Corporate or Partnership or Trust in any form). There may be apprehensions by the impacted establishments, institutions including Banks, Insurance Companies in this regard.
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I am talking about a practical anomaly impacting a common man who happens to invest his surplus cash, if any, left out after spending for bare necessities in life, at times, he might be forced to commit with a pure intention of savings or some sort of investment with a return of investment inmind.
Most banks, insurance, hospitals, commercial establishments,shopping malls, Jewelry shops and air travel service providers including airlines have the payment option by cash or a charge to debit card, credit card (Visa, Master Card, Amex, Diners) whatsoever.
Some, rather, most of them quote the terms and conditions as stipulated by RBI rules (the Country’s Central Bank) and hence charge an additional charge of 1% to 3%, at times even 4% depending on type of transaction or shopping that one enters into.
Insisting on payment by Cash only and not accepting a Credit Card Payment
For discussion, let’s exclude the case of air travel,leisure travel and jewelry shopping, even luxurious electronics shopping, all of these are mere luxury by nature, the world would not turn upside down if someone does not buy a jewelry or travel on leisure, so any charge extra is justified under whatever pretext (quoting the Central Bank’s rules and/or the Seller’s or Service Providers’ Financial terms and conditions whatsoever). The charge here somehow is justified as regardless who bears or absorbs the charge (the customer and/or the Credit Card Company – read Amex, Diners, Visa or Master Card – is going to charge anyway for the transaction as per their T&Cs).
I am talking about the charge to Credit Card being rejected by the Seller / Service Provider, where the customer is insisted to settle byDebit Card or cash. I would say it’s the customer who pays for the product or services, under the pretext that bank will charge extra.
Whether the payment is by debit card or credit card, seller in any way gets the credit instantly, customer’s account is debited instantly,while the seller claims there is a delay in getting a credit to his account. If there is a delay, it’s the problem of operational convenience between the Seller and the Bank, where in the world is the customer to be penalized for any delay in the process, especially since customer is getting the debit instantly, and there is no delay here.
As long as the customer is being debited instantly –regardless if it is debit card or credit card – it’s as good as he is paying cash. It only then becomes for customer to settle to the Bank (or the party that issued the Credit Card) where the seller has no say or no role to play. Why then, the seller rejects to payment option by Credit Card?
Charging service charges or fees on the transaction amount if paid by debit card or credit card
I don’t see any reason why there should be a charge for any transaction that involves shopping at a super market, retail outlet, hospital or insurance related products or services (as mentioned above, let’s not consider luxury shopping including leisure travel and jewelry shopping here, where I have already clarified the charge is justifiable as if customer is enjoying a luxury or planning for a luxury so he is entitled to pay for any additional charge).
However, any bare necessity payables shall NOT be subjected to this because the customer is paying for his day to day living costs and sustenance, and when it comes to insurance products, the customer is investing his spare cash, if any, or by borrowing from credit card, where he is investing in his future for his life with a view to secure himself or his family. Without insurance, he will be into doldrums and his entire rest of life would be in peril if he does not have enough insurance coverage and protection, so insurance payments are NOT a luxury and it is a bare necessity.
Moreover, the customer is investing his hard earned money into his future and the insurance company is getting the cash flow without any interest (as if being paid in the near future to the customer, like a term deposit).Insurance Company is obviously going to reinvest elsewhere to make their sustained business for a longer time into the future.
Moreover, someone might say 'Insurance is a subject matter of solicitation' so nobody is forcing the customer to take up an insurance policy in principle. I would say, across the world, no customer would volunteer to take up insurance as a commitment, so the word 'solicitation' is only on document as if customer initiates it; however, in practice, the insurance agent or consultant is the one who initiates it by his marketing skills to sell a product or service. Hence, we cannot come to a conclusion here 'it is a subject matter of solicitation by customer, so he is supposed to pay for additional charges, if any, in the process.
So, any charge (i.e. 1%to 3% whatever is charged as service charges for credit card payments) is NOT justified; if Visa or Master Card company is charging them, from a pure Financial and operational perspective, the Insurance Company can afford to absorb that cost so it can absorb that charge.
No Central Bank would insist on the Bank to charge the customer for administrative fees etc. for such services, especially insurance,health-care services.
Here, let me quote this popular saying, when it comes to trade, commerce and business, there are always two rules that apply:
Rule # 1: Customer is King or God.
Rule # 2: Customer is always right; any questions or concerns, see Rule # 1.
I know these rules ONLY applies outside India, purely with a western mindset. In India, Customer is NOT even considered an object.
[A literal Tamil Translated version would follow shortly].
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