Convenience Fees: 50% pay; 78% prefer free platforms

Convenience fees are increasingly burdening Indian consumers, with 50% paying these charges for most online purchases, according to a LocalCircles survey. These fees, once limited to specific services, now extend across e-commerce, digital payments, and ticketing platforms. While 62% face fees for tickets or services, 52% experience them for product purchases. Amazon and other platforms recently introduced new charges, fueling demand for fee-free alternatives, favored by 90% of consumers. Despite RBI regulations, transparency issues persist, frustrating shoppers nationwide.

Convenience fees have become an unavoidable expense for Indian consumers, with half of them paying these charges for most online purchases, a recent LocalCircles survey reveals.

Once limited to specific services, such fees now affect a broad range of transactions, from e-commerce shopping to digital payments and ticketing platforms. This widespread imposition has amplified concerns for millions of online shoppers across the nation.

Services and Products Bearing the Brunt

The survey highlights that convenience fees are most prevalent in online ticketing and service-based platforms. A notable 62% of consumers reported paying these charges on the majority of their ticket or service purchases. Of this group, 37% faced fees on all such transactions, while 25% were charged for most.

The trend extends beyond services to everyday product purchases. Among respondents, 52% indicated paying convenience fees for most of their online shopping. Specifically, 19% stated that every item they bought online incurred such charges, and 33% reported fees on the majority of purchases.

Consumers Favor Fee-Free Alternatives

There is a strong demand for platforms that do not impose convenience fees. The survey found that 78% of participants are “very likely” to prefer businesses offering fee-free transactions. An additional 12% indicated that they are “somewhat likely” to switch to such platforms. This overwhelming 90% preference underscores the growing frustration with added costs.

Amazon and Other Platforms Under Scrutiny

The issue has gained renewed attention after Amazon India introduced a ₹5 marketplace fee on all orders, including those by Prime members. Other major platforms like Blinkit, Zepto, Swiggy Instamart, BigBasket, and Ajio have implemented similar charges. However, certain categories, such as digital services and gift cards, remain exempt from these fees for now.

Regulatory Framework vs. Implementation

The Reserve Bank of India (RBI), in an April 2022 notification, mandated that convenience fees must be transparently disclosed to customers before a transaction. The directive defines these fees as fixed or proportional charges for using credit or debit cards where such methods are not the norm.

Despite this regulation, transparency remains a significant issue. The survey notes that most companies fail to display these charges upfront, leaving consumers unaware until the final stages of their transactions.

Beyond Online Platforms

Convenience fees are not confined to online shopping. Many physical stores also impose surcharges on card payments, particularly for credit card transactions. These fees, which can vary widely, sometimes reach up to 3% of the transaction value. In extreme cases, such as school fee payments via credit card, parents have reported charges exceeding ₹2,000.

Survey Methodology

The LocalCircles survey, which forms the basis of these insights, gathered over 40,000 validated responses from across 321 districts in India. The respondent demographics were as follows:

• Gender: 64% male, 36% female

  
  

• Location: 42% from tier-1 cities, 22% from tier-2 cities, and 36% from tier-3, tier-4, and rural areas

  
  

All participants were registered Indian citizens verified through the LocalCircles platform.

Convenience fees have become a growing financial burden for Indian consumers, impacting both online and offline transactions. While regulations exist to address transparency, poor implementation continues to frustrate shoppers. As more platforms add these charges, the demand for fee-free alternatives is surging—a sentiment that businesses cannot afford to ignore.