When shopping for things like jewelry or electronics in a store or booking flight tickets online, you must’ve noticed that merchants levy extra taxes when you make your payment through your credit card instead of cash. But have you ever wondered why you are being charged just for using a different mode of payment? After all your purpose for using a credit card was mainly to earn rewards.

What are Credit Card Convenience Fees

This extra fee is also termed credit card convenience fees. It is a fee that is charged by businesses when a customer uses a credit card to pay instead of cash/debit card (which is the standard payment method). The convenience fee is usually a fixed percentage of sales made.  The reason that most businesses charge this fee is that credit card issuers and payment processing platforms take a small percentage of the total transaction cost every time a payment is made.

Why is Credit Card Convenience Fee Charged?

For payment platforms, the convenience fee helps cover the maintenance charges of the digital payment infrastructure. While the convenience fee might seem unfair to customers, the idea behind charging it is to provide customers with the privilege of an alternative payment method. Through convenience fees, banks and payment gateways retrieve the cost of functioning online transactions. The convenience fee is non-refundable, which means that if you return a product bought online, the amount equivalent to the price of the product will be returned, but the fee won’t be. This fee can sometimes be the only sustainable source of income for online platforms.

The Government of India promotes digital payments and is against the idea of imposing any additional charges when a customer uses an online payment terminal. In the Guidelines on Regulation of Payment Aggregators and Payment Gateways, (updated on 17th November 2020) it is mentioned that “Information on other charges such as convenience fee, handling fee, etc., if any, being levied shall also be displayed upfront by the PA (payment aggregator).”

The terms state that charging convenience fees on payment platforms is legal as long as it is mentioned in the terms and conditions of the payment platform. Customers must clearly be informed at the point of sale that there will be an additional convenience fee charged during payment. Any masking of additional charges such as convenience fees is not legal.

Convenience fee charges for different platforms

Convenience fees charged by online platforms vary across different segments. For some of the popular platforms like IRCTC, Paytm, etc, the credit card convenience fee is mentioned below:


For ticket booking platforms such as IRCTC, the convenience fee charges are Rs. 15 plus GST for booking non-AC tickets and Rs. 30 plus GST for booking AC tickets. The charges are reduced when customers pay through Unified Payments Interface (UPI) or Bharat Interface for Money (BHIM).


Paytm charges its users a 2% convenience fee when adding balance to their wallets via credit cards. This fee is canceled if the customer tops up their wallet through UPI or a debit card. Paytm argues that this fee is charged by banks for loading funds into the Paytm Wallet.

Petrol Pumps

Indian petrol pumps charge a convenience charge of 1% when you pay for the fuel through a credit card. Some credit cards also offer benefits such as a fuel surcharge waiver through which you won’t have to pay the additional fees charged.

Check Here: List for Best Credit Cards for Fuel Purchases


The movie ticket booking App BookMyShow charges Rs 19.82 as an internet handling fee. The charge helps in the coverage of the amount spent to maintain the digital infrastructure of the app and run it efficiently.

Other Platforms

Similarly, when you buy a car through a credit card, the dealership charges you a convenience fee of about 2-3% of the total amount. The fee is levied to cover the transaction cost that the merchant pays to the credit card company. Cars are usually expensive purchases, so the convenience charges can end up being huge.

Last year, the online shopping platform levied a free convenience fee of Rs 49-149 which was waived if the order was above a certain amount. This was in response to the pandemic when the e-commerce companies were suffering losses and measures were taken to curb it.

Also Read: Should You Use Credit Cards For Everyday Purchases?

The Bottom Line

With an increase in digitalization, more customers are relying on credit cards instead of cash. While the convenience fee charged helps businesses cover the costs associated with credit card payment processing, these charges can end up being a huge expense for the customer when they make a large purchase through the credit card. The convenience fee is usually levied on credit card transactions and cannot be avoided if you are using it as a payment method. In certain credit cards, it can be worth paying the convenience fee if it offers a higher reward rate than the additional fee. However, if you dislike the idea of paying the extra charges, you can consider switching the mode of payment on that particular transaction.

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