Do you own an ICICI Bank credit card? Have you received this message,”Dear Customer, starting 20-Oct-22, all transactions on your ICICI Bank Credit Card towards rent payment will be charged a 1% fee.”
This message is usually received by the customers who use their credit cars to pay their house rent through Cred, RedGiraffe, Mygate, Paytm, Magicbricks and other platforms. Till now, no bank or credit card company was levying any fee on such transactions. Now, ICICI Bank is the first lender to charge fee on rent payments through its credit cards, Hindustan Times’ business website Livemint reported.
Usually, a tenant adds the landlord’s bank account details or the unified payments interface (UPI) id under the recipient option on the payment platform and completes the transaction via his/her credit card.
The platforms which facilitate such transactions charge a convenience fee of 0.46-2.36 per cent on each transaction. The convenience fee is actually a substitute to the merchant discount rate charged by online platforms to the merchants for using the card services for accepting bill payments, Livemint report adds.
The merchant in the rent payment feature is the landlord who will not pay a fee for receiving rent, it is the tenants who are charged transaction fees for paying rent. From now, the one per cent fee charged by ICICI Bank will be in addition to the transaction fee.
The bank has not labelled the fee which can tell the reason for it being charged, the move is being seen as a method to curb the misuse of rent payment feature for credit rotation.
According to industry experts, some customers add their family members or friends as landlords on these platforms to transfer money in their bank account to convert it into cash at no extra cost. The fee to withdraw cash from an ATM using credit card ranges from 2.5-3 per cent of the amount withdrawn.
Industry experts say that rent payment through credit card feature may be misused easily as all online platforms offering this facility, except RedGiraffe, don’t ask for rent agreement to validate the authenticity of the transaction.