Be it the Bollywood blockbusters or the ICC Men’s Cricket World Cup 2023, most consumers have been booking tickets online and there’s one complaint that they all have in common—high convenience fees or internet handling charges levied by the platforms for the transactions. These charges are levied by ticket or service booking platforms like BookMyShow, PVR, IRCTC or many others that provide ticket booking services, and in some cases it’s as high as 20 per cent of transaction value.
A survey conducted by LocalCircles of 32,000 respondents from across 319 districts of India has found that 41 per cent of consumers said they had been charged convenience fees for all services purchased online, and 38 per cent said they were charged convenience fees for the majority of services purchased online. As much as 83 per cent of respondents said they paid the convenience fee grudgingly.
The survey found that 79 per cent of consumers were fed up with excessive convenience fees/service charges/internet handling fees being levied by platforms. They feel that this is coming in the way of Digital India and more people purchasing services/tickets online.
Among the respondents, 64 per cent were men, AND 36 per cent women. Further, 46 per cent of respondents were from Tier 1 cities, 32 per cent from Tier 2 and 22 per cent from Tier 3, 4 and rural districts.
According to a Reserve Bank of India (RBI) notification on April 21, 2022, “Convenience Fee is a fixed or pro-rata charge on the use of credit/debit cards as one of the alternative forms of payment which is not ordinarily accepted vis-à-vis other forms of payment.” The notification stipulates that a convenience fee on specific transactions “shall be indicated to the cardholder in a transparent manner, prior to the transaction”. The fact is that despite this guideline, only a handful of portals display this information upfront. This holds true even for government-owned entities like IRCTC. Most platforms also charge this convenience fee according to the number of seats booked as opposed to one fee for the entire transaction, so for four movie tickets bought together in one transaction, the consumer pays a convenience fee on each one of the four seats.
LocalCircles has received hundred plus complaints from consumers across India about excessive transaction fee in response to its September 2022 survey on the subject, where many even suggested that convenience fee was turning out to be an impediment in the Government’s Digital India mission. Given strong consumer interest in the subject and no action from any government stakeholder, LocalCircles decided to conduct a follow-up to study some additional aspects. The 2023 survey received over 42,000 responses from consumers located in 346 districts of India.
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The first question in the survey asked consumers, “What has your experience been with convenience charges in the last 12 months”. Over 11,000 consumers responded to this query, with 41 per cent claiming that they have “been charged convenience fee for all services purchased online” and 38 per cent shared they had “charged a convenience fee for the majority of the services purchased online”. However, 16 per cent claimed they had “never been charged convenience fee for services purchased online”, and 5 per cent of respondents gave no clear reply. On an aggregate basis, 79 per cent of consumers surveyed claim they are being charged convenience fees for services they have booked online.
When services like tickets are procured digitally, the supplier or seller is able to lower the cost of manpower and facilities and instead spend more on the deployment of user interfaces and backend servers. However, despite the net cost savings, most platforms, whether selling movie or sports tickets, railway tickets or airline seats, are levying this convenience, internet handling or service fee, which is beyond comprehension for most consumers.
As the convenience charge generally gets displayed at the end of the booking on most platforms, the next question in the survey asked consumers, “When you see convenience or service charges being levied on the purchase of tickets/services, how do you proceed with the purchase or booking?” Out of the 10,960 respondents, only 10 per cent indicated that they “happily pay, at least I don’t have to stand in a queue”; 5 per cent prefer to stand in a queue and buy the ticket/service; but 83 per cent “pay disapprovingly” and 2 per cent of the respondents gave no clear response.
This indicates that while most consumers are unhappy about the platforms levying a convenience fee, they are paying it because they have gone through the registration process, seat/service selection process, etc., and are close to concluding the transaction. Most consumers would rather have the platforms display this information upfront so they can make an informed choice.
The next survey question focused on finding a way forward and asked consumers, “Should the government eliminate convenience charges for online bookings of services/tickets sold by its departments and PSUs?” As many as 10,765 or 84 per cent of respondents said “Yes”; 10 per cent said “No” and 6 per cent said “can’t say”. A sizable number of consumers believe that the government should take the lead and set the example by charging no convenience, service or transaction fee on digital transactions. Some consumers also cited the example of UPI payments where no charges are levied. Consumers want similar practices to be adopted by other central government bodies, PSUs and state government bodies.