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Movie Ticketing Apps Not Allowed to Charge 'Internet Handling Fee' from Customers, Says RBI In Response to RTI Query

Vijay Gopal filed an RTI with the Reserve Bank of India and IT Ministry to find out whether companies were allowed to charge 'internet handling charges' for online transactions from customers. Turns out, they're not.

Rakhi Bose | @theotherbose

Updated:March 17, 2019, 4:20 PM IST
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Movie Ticketing Apps Not Allowed to Charge 'Internet Handling Fee' from Customers, Says RBI In Response to RTI Query
Representative photo. (Image: Reuters)
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Ever wondered why you end up paying slightly more when booking movie tickets through apps than you would if you booked the tickets at the theatre box office? Turns out that these movie ticket selling apps may illegally be overcharging customers by levying a "handling fee".

An RTI query has revealed that portals like BookMyShow levy an extra 'internet handling fee' against each ticket, which is in violation of the RBI's Merchant Discount Rate (MDR) regulations that were issued by the Reserve Bank of India on Dec 6, 2017.

As per the regulations, the merchant (in this case, the movie theater) is supposed to pay an amount to the bank against every transaction made by customers using a credit or debit card as per MDR regulations.

However, movie ticketing apps may be allowing the merchant to transfer this fee onto unwitting customers by charging it from them in the form of " internet handling fee". This fee includes 18 percent Integrated GST (IGST) which the customer is supposed to pay.

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(Image of the movie ticket bill from BookMyShow as it appeared earlier, provided by Forum Against Corruption)

The petition was filed by Hyderabad-based activist Vijay Gopal who is the president of an organisation called ‘Forum Against Corruption’. The RTI was filed with the RBI as well as the Ministry of Electronics and Information Technology. The RBI said in response that the MDR mandated a fee for payment gateways that was to be paid to the banks by merchants. It also said that portals like BookMyShow were not allowed to charge the same from customers.

WhatsApp Image 2019-03-15 at 6.34.41 PM

(Screenshot of the copy of the RBI response accessed by News18.com. Source:Forum Against Corruption)

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(Screenshot of the copy of the RBI response accessed by News18.com. Source:Forum Against Corruption)

"This sort of unethical practice based on a 100% revenue model where even merchants are trying to get customers to pay even operational costs. And more companies are trying tout these methods to maximize profits," Vijay Gopal told News18.

According to him, movie theatres charge about 18 percent more than the cost of the ticket when customers buy it through online portals. "When I realised this, I contacted BookMyShow last year. Back then they called it a 'Payment Gateway Charge". They responded to me saying it was a small convenience fee they charged in return for the additional services they provided. That made no sense," Gopal said.

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(Image of a ticket bill on BookMyShow now, provided by Forum Against Corruption)

Gopal added that more companies like cab aggregators including Ola and Uber, and food delivery services like Swiggy have started using these tactics to maximise profits.

"In cab aggregator apps, it's called a 'surcharge', in Swiggy, some restaurants now apply a 'packaging charge'. It's all very vague," Gopal said, adding that these companies had a free hand since no one was asking the relevant questions.

The RTI application he filed further asked the RBI if online e-commerce portals like Amazon, Flipkart, Shopclues and others were allowed to charge extra from customers for allowing online transactions, to which it said that the RBI had not issued any instruction in this regard.

Gopal has filed a case in the Consumer Court against PVR, BookMyShow and the IT Ministry. The anti-corruption crusader felt that companies could only be empowered to take such profiteering measures when relevant authorities were "asleep on the job".

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(IT Ministry's response to the RTI)

"A complaint was filed with the Ministry of Electronics and I.T. on 18th Jan 2019 (MINIT/E/2019/00156) The issue is still in 'work in progress' state. Why does the ministry need more than two months to act on simple things?" he asked.

Gopal is the same activist who in 2017 had filed a case in the Hyderabad Consumer Forum against INOX multiplex for overcharging him for his water. The company had been fined Rs 5,000 for charging above MRP.

When contacted, a BookMyShow spokesperson told News18.com, "We cannot offer any comment on this matter as it is subjudice". The case is set to be heard in court on March 29, an executive at the Forum Against Corruption confirmed.

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