Internet Handling Fee – Still a Dilemma for Movie Buffs?

With the weekend up on us, many are busy booking tickets to the latest Bollywood as well as Hollywood releases. Much of this will be done online. However, have you noticed how most of these ticketing apps charge a convenience fee – a service, over and above the price of the ticket? What’s interesting to note here is that the latest Right to Information (RTI) query has shown that these charges could very well be unauthorised.

No doubt it is a lot easier to book a movie ticket online through an app on your mobile phone or a website, but have you ever wondered what this extra ‘internet handling fee’ that you pay against each ticket is all about?

A recent suit, filed against a popular online aggregator, revealed that according to the law we should actually be ‘exempted’ from paying such extra fee while booking a movie ticket because it is in violation of RBI’s Merchant Discount Rate (MDR) Regulation.

In 2019, Vijay Gopal, who is the President of the Hyderabad-based ‘Forum Against Corruption’ filed an RTI with Reserve Bank of India, asking this very question: Can online movie ticketing apps charge this Internet Handling Fees for booking tickets online?

The RBI’s response also said that the internet usage fee was a violation of the RBI’s Merchant Discount Rate (MDR) regulations. MDR is a payment gateway fee paid by the merchant to the bank for accepting customer payments via debit or credit cards. The RBI said that the fee has to be paid to banks by merchants (in this case, online aggregator or the cinema portal) for online transactions. But this fee is being charged to the moviegoer as a ‘convenience fee’. Every time you make a transaction with any shop or outlet using your debit or credit card, the merchant with whom you are trading is expected to pay a certain percent of the transaction money to the related base bank. [In re Vijay Gopal Vs Big Tree Entertainment Pvt. Ltd. (CCI), 2021]

This money has to come entirely out of the merchant’s pocket and the burden of the amount to be paid cannot be shifted to the customer, i.e., you.

Most of our favourite apps for booking tickets online often charge what is known as an ‘internet handling fee.’ Usually all of us are ready to pay this extra amount of money, that varies in accordance with the amount of transaction we make. This is because of the convenience of letting a third party book the tickets for us.

The RTI stated that online platforms through which movie tickets are booked, do not hold the authority to levy handling fees from customers. The reply further explains that this is in violation of the RBI’s Merchant Discount Rate (MDR) regulations. The Hyderabad District Consumer Disputes Redressal Commission penalised these online aggregators and theatre chains for levying ‘internet handling charges’ on consumers. The consumer court has termed the charges, which are almost one-third of the ticket price, as “unfair.”

Terming the ‘internet handling charges’ as “unfair”, the Hyderabad District Consumer Disputes Redressal Commission ordered them to restrain from collecting a fee of more than Rs 6. This cap of Rs 6, the Commission said, was because this is the cap for Andhra and Telangana, plus other applicable facilitation charges based on Section 6A of The IT Act, 2000, which pertains to delivery of services by a service provider. (Harshwardhan Deole v. 1. Inox Movies, 2019)

A penalty of Rs. 5000 was paid towards Consumer Legal Aid Account of the court. Also, a compensation of Rs. 25000 and Rs. 1000 litigation cost was paid to the complainant by the online ticketing apps.

The Commission in its order said, “It is unfair and illegal to indiscriminately pass on the costs to the customers in the form of “internet handling charges” without unbundling the charges imposed on the customers, especially when the fact is that the merchants cannot pass on MDR (Merchant Discount Rate) to its customers...”

The websites, however, were not quiet about this whole suit. Harish Anand Thilakan, CEO of Influx Worldwide stated that the cost charged as internet handling fee is actually needed and necessary for the proper functioning of the online portals. He believes that without this cost, the infrastructure of internet platforms will collapse, and they shall not be able to provide smooth services to their customers.

Surely, movie ticketing apps like BookMyShow is one of India’s go-to entertainment ticketing platforms and probably next in line to enter the coveted club of unicorns. Before this revolutionized concept, I remember standing in long queues. There were these pigeon holes for ticket bookings.

The convenience fee on movie tickets covers more than just Transaction Discount Rate. The cost actually encompasses pretty large spends that cinemas need to incur in order to run efficient online ticketing engines. When any of these players allow you to log on through an app or website, keeping these running takes a lot of money. The cost of infrastructure to keep this going is big. (M/S.P.V. R Ltd. v. C.T.O., 2020)

Therefore, those who wish to complain about the customer service offered by such RBI regulated entities can do so by visiting https://rbi.org.in/scripts/complaints.aspx. To report a violation by a merchant, one will have to approach the specific bank that was used by the merchant to make the transaction. It further said that if the bank fails to take action within 30 days or the bank’s response is not satisfactory, the concerned customer can approach the Banking Ombudsman.

References: 

https://www.deccanherald.com/metrolife/metrolife-your-bond-with-bengaluru/internet-handling-fee-under-scrutiny-731842.html

https://taxguru.in/wp-content/uploads/2022/06/In-re-Vijay-Gopal-Vs-Big-Tree-Entertainment-Pvt.-Ltd.-CCI.pdf

https://inc42.com/buzz/the-ills-of-tech-movie-ticket-booking-sites-not-allowed-to-charge-internet-handling-fees/

https://thelogicalindian.com/story-feed/awareness/rti-bookmyshow-internet-handling-fee

https://timesofindia.indiatimes.com/entertainment/hindi/bollywood/news/not-obligated-to-but-moviegoers-still-pay-internet-handling-fee/articleshow/68955880.cms

https://www.moneycontrol.com/news/trends/current-affairs-trends/court-penalises-bookmyshow-pvr-for-charging-unfair-internet-handling-fees-6649301.html