Rent Paid Through ICICI Credit Card to Attract 1% Fee

“Dear Customer, starting 20 October 2022, all transactions on your ICICI Bank Credit Card towards rent payment will be charged a 1% fee." 
 
If you own an ICICI Bank credit card, you would have received such a text message. It is meant for cardholders who use their credit cards to pay house rent through platforms like Cred, RedGiraffe, Mygate, Paytm and Magicbricks, among others. 
 
So far, no fee was being levied by any bank or credit card company on such transactions. ICICI bank is the first to introduce a fee on rent payments done through its credit cards and others are expected to follow. 
 
What did you pay so far
 
Tenant adds the landlord’s bank account details or UPI (Unified Payments Interface) address under the recipient option on the platform and completes the transaction with his credit card. 
 
Platforms facilitating such transactions charge a convenience fee of 0.46-2.36% on each transaction. This convenience fee acts as a substitute to MDR (merchant discount rate) that online platforms charge merchants for using the user’s card services for accepting bill payments. Since the merchant in the rent payment feature is the landlord, who will not pay a fee for receiving rent, platforms charge users paying rent in the form of transaction fee.
 
The 1% fee charged by ICICI bank will be in addition to the transaction fee that online platforms impose. 
 
Why this fee
 
While the bank has not labelled the fee that can ascertain the reason for it being charged, it could be a way to curb the misuse of rent payment feature for credit rotation. 
 
Industry experts have pointed out that customers add their family or friends as landlords on these platforms and transfer money in their bank account to convert it into cash at no extra cost. Fee to withdraw cash from an ATM using credit card ranges from 2.5-3% of the amount withdrawn.
 
 Rent payment through credit card feature can be misused easily as all online platforms offering this facility, barring RedGiraffe, do not ask for rent agreement to validate the genuineness of the transaction. 
 
Banking experts say that this fee is introduced to stop credit rotation through bogus rent payments. In the past banks have introduced surcharges of 0.25-1.8% on train ticket booking and fuel payments done through credit cards to repress similar practices.

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Changes in Our Business Model
 
 
25th Sept 2020
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
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What changes:
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Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder