1 in 2 consumers report paying convenience fee for majority of their product and service purchases; 8 in 10 say they will prefer any platforms that do not levy such a fee

June 23, 2025, New Delhi: Earlier this month, Amazon India implemented an INR 5 marketplace fee on every order following the footsteps of other e-commerce and quick-commerce platforms like Blinkit, Zepto, Swiggy Instamart, BigBasket, Ajio, etc., which have also introduced similar fees. This fee will apply to all orders, including those placed by Amazon Prime members, who anyway pay for faster delivery. Gift cards and digital services of Amazon would however be exempt from the fee.

The concept of convenience fee is not new as when booking an air or train ticket it is normal to be charged a convenience fee. Similarly, fixed charges must be paid for payment of electricity or broadband bills, purchase of movie tickets through online platforms. Many times, extra charges are levied as a convenience fee in the name of packaging, delivery or if the order is below a minimum threshold set. What is more, the convenience fee varies in different cities and towns to meet varying delivery charges. In case a product is returned for whatever reason by the customer, the convenience fee is not refunded.

The Reserve Bank of India (RBI) has established guidelines for convenience fees in India, but there appear to be issues with implementation. According to RBI notification on April 21, 2022: “Convenience Fee is a fixed or pro-rata charge on use of credit/debit cards as one of the alternative forms of payment which is not ordinarily accepted vis-à-vis other forms of payment.” The notification stipulates that if convenience fee is charged on specific transactions, it “shall be indicated to the cardholder in a transparent manner, prior to the transaction”.

This is to say that transactions fees are charged by businesses when customers opt for specific payment methods, such as credit cards or online systems, rather than traditional methods like cash or checks. This fee is designed to offset the extra costs of processing this digital payment.

As per the rule, charging convenience fees requires businesses to disclose the fee before payment, ensure it’s optional, and not a surcharge on the transaction amount. The fee must cover the cost of a specific service, and businesses must comply with regulations, ensuring transparency and fairness in its application. However, this transparency is often missing when added costs or convenience fees are levied. Recently, a consumer using GooglePayIndia shared on social media his surprise on discovering that he had been charged a convenience fee to pay mobile phone bills from a linked bank account.

It is not only the online platforms that charge convenience fees for many transactions for goods and services but also stores. Many stores charge extra when consumers make a card payment, particularly credit card payment. The fact is that hardly any company or portal displays this information up front. This is true even for public sector companies like IRCTC, which charge convenience fees according to the number of people planning to travel on a ticket and not a single transaction. Similarly, in the case of cinema tickets, the charges vary depending on whether a debit or a credit card is used. A credit card is perceived to be riskier for collection of the payment.

While normally, convenience fees can be up to 3% of the transaction amount. This may seem small but can significantly impact on the profitability of business or any transaction if a large sum is involved in the short or over a period. Unfortunately, sometimes booking special events like a highly anticipated cricket match can cost more because of the higher convenience fee. Some parents who paid school fee via a credit card experienced a convenience fee of over INR 2000, again with no justification and shared such examples on LocalCircles. Looking at this agitating issue, LocalCircles has conducted a new survey to find out where and how much of a problem convenience fee has become. The survey received over 40,000 responses from consumers located in over 321 districts of the country. 64% respondents were men while 36% respondents were women. 42% respondents were from tier 1, 22% from tier 2 and 36% respondents were from tier 3, 4 and rural districts.

62% of consumers surveyed say they are being charged convenience charges for majority of the tickets/services they purchase online

The survey first asked consumers, “Many ticketing/ service purchases require consumers to pay convenience charges for making their booking online. What has been your experience with convenience charges/ fees in the last 12 months?” Out of 13,357 who responded to the question 37% stated that they have “been charged convenience charge for all services purchased online”; 25% stated that they have “been charged convenience charge for majority of the services purchased online”; and 21% stated that they have “been charged convenience charge for only a few services purchased online”. However, 25% stated that they have “never been charged convenience charge for services purchased online”. To sum up, 62% consumers surveyed say they are being charged convenience charges for majority of the tickets/services they purchase online.

52% of consumers surveyed say they are being charged convenience charges for majority of products they purchase online

Apart from services, convenience charges are levied even on many products purchased online. The survey thus asked, “Many ecommerce platforms now require consumers to pay convenience charges for making their purchase online. What has your experience been with convenience charges/ fees in the last 12 months when purchasing groceries, fashion, beauty products online?” Out of 13,746 who responded to the question 19% stated that they have “been charged convenience charges for all products purchased online”; 33% stated that they have “been charged convenience charge for majority of the products purchased online” and 25% stated that they have “been charged convenience charge only for a few products purchased online”. However, 21% of respondents stated that they have “never been charged convenience charge for products purchased online” and 2% of respondents did not give a clear answer. To sum up, 52% of consumers surveyed say they are being charged convenience charges for the majority of products they purchase online. Some platforms do exempt convenience fee if the value of the order is above a certain value and some others that are still getting established tend to not levy such a fee.

78% of consumers surveyed say that they are very likely to prefer platforms that do not levy a convenience fee on product or service purchases over those that do

Indian consumers are known to be very price conscious so rightfully not having to pay convenience fee should be a winner. The survey next asked consumers, “If any platform selling products/ services does not require consumers to pay convenience charges/ fee, how likely are you to prefer such a platform versus those that have a convenience charge/ fee?” Out of 13,273 who responded to the question 78% stated “very likely” and 12% stated “somewhat likely”. However, 5% of respondents stated, “not likely as convenience charge/ amounts are minimal” and 5% of respondents did not give a clear answer. To sum up, 78% of consumers surveyed say that they are very likely to prefer platforms that do not levy a convenience fee on product or service purchases over those that do.

Consumers have helped identify the platforms (graphic below) among those which levy a convenience fee. From consumer feedback, LocalCircles has learnt that in many cases the convenience fee is not uniform for not just different platforms but also what is charged by the same platform. This depends on the city, location within the city/ town and the products and services being bought and the total bill.

In summary, the survey reveals that convenience of a digital transaction comes at a cost as 62% of consumers surveyed say they are being charged convenience charges for most of the tickets/services they purchase online. Similarly, 52% of consumers surveyed say they are being charged convenience charges for most products they purchase online. Not so surprisingly, 78% of consumers surveyed say that they are very likely to prefer platforms that do not levy a convenience fee on product or service purchases over those that do. However, with most online platforms charging a convenience fee now, the big question consumers are asking is – Doesn’t this run counter to the idea of Digital India?

Survey Demographics

The survey received over 40,000 responses from consumers located in over 321 districts of the country. 64% respondents were men while 36% respondents were women. 42% respondents were from tier 1, 22% from tier 2 and 36% respondents were from tier 3, 4 and rural districts. The survey was conducted via LocalCircles platform, and all participants were validated citizens who had to be registered with LocalCircles to participate in this survey.