SBI Cards & Payment Services Private Limited (SBICPSL) recently announced that it will charge a Rs 99 processing fee and collect taxes on it. The new rule will go into effect on December 1, 2021.
New Delhi: The State Bank of India (SBI) has announced that all EMI transactions made through their credit cards would be subject to a processing fee as well as tax. SBI Cards & Payment Services Private Limited (SBICPSL) recently announced that it will charge a Rs 99 processing fee and collect taxes on it. The new rule will go into effect on December 1, 2021, which is only 17 days away, on Saturday, November 13. This processing fee will be applied to all equated monthly instalment (EMI) purchases performed at retail locations and e-commerce sites like Amazon, Flipkart, and Myntra.
On Friday, November 12, an e-mail was sent to SBI credit card customers informing them of the change. “Dear Cardholder, We would like to inform you that with effect from 01 Dec 2021, Processing Fee of Rs. 99 + applicable taxes will be levied on all Merchant EMI transactions done at Merchant outlet/website/app. We thank you for your continued patronage. Please click here to know more about Merchant EMI Processing Fee,” the mail from SBICPSL read on the day. This notice was sent to all SBI credit card customers. These rates will apply in addition to interest costs when converting one’s purchases into monthly payments, a service that tens of thousands of people currently use.
Many retailers offer discounts on EMI transactions by paying the interest to banks, which appears to the customers as ‘zero interest’. Even in this situation, as per the new guidelines set to be adopted by the state-owned institution, SBI credit card customers would be required to pay a processing fee of Rs 99 beginning December 1.
According to reports, the Rs 99 processing fee would be applied only to transactions that have been successfully converted into equated monthly instalments or EMI transactions. The processing cost, on the other hand, will be refunded if the EMI transaction fails or is cancelled. In the event of an EMI pre-closure, however, this will not be reversed.
If cardholders shop at any retail location, the corporation will inform them of the newly announced processing fee’s application to EMI transactions via charge slips. It will inform the processing charge for online transactions done through EMI on the merchant’s payments page. The bank will not impose a processing fee for transactions completed before December 1, but whose EMI will begin after that date, because the old regulations will apply. Any reward points that may have been present will not be used for transactions converted into merchant EMI.
“These processing charges from SBICPSL are as per industry standards. Other leading private banks have been charging these fees for a long time,” a retail banker, on the condition of anonymity, has told Moneycontrol.
But how does this new rule work in practise? Assume you use your SBI credit card to buy a phone from an e-commerce website, such as Amazon, using the bank’s EMI scheme. Then, to process the transaction, SBICPSL would charge you an extra cost of Rs 99. It will also levy additional taxes on you. This additional amount, together with the EMI amount for that product, will appear on your credit card’s monthly statement.
According to reports, the new policy will have an impact on ‘Buy Now, Pay Later’ plans, making them more expensive for customers. E-commerce websites frequently include these alternatives.
