A level transacting field, please

A waiver of the fee charged by banks on fund transfers kicked in this week, following a Reserve Bank of India directive. Separately, payment gateway Paytm has denied levying any transaction charges on users transferring money to their wallets from any source, as some media reports had conveyed. The two developments, though unrelated, have something in common: they show a lack of clarity in the charges our financial system imposes, often without the knowledge of customers.

After all, how many of us would have noticed the tiny sum silently deducted by banks each time we made a fund transfer? Not many, surely. Even if some of us did spot it, did we know how it was calculated? The fact is that customers in India are often subjected to hidden charges. It’s done in a way that goes unnoticed, let alone lead anyone to protest. Small amounts on each transaction add up to a sizeable income when collected from thousands of customers. This is how money is earned on volumes in various service sectors. But still, why hide it? In the typical bank statement, only the net transfer amount show up. Transaction levies find no separate mention.

It’s not just banks. Some merchants impose a convenience fee on non-cash payments. This also seems unjustified, considering that the customer isn’t the sole beneficiary of cashless convenience. Merchants and banks save on infrastructure and staff costs each time a customer transacts online, rather than visiting a store or branch. As the government pushes for greater digital adoption, online transactions are only going to increase. Regulators must ensure that the rules are fair, both to banks and their customers.