Case against BookMyShow, PVR for levying internet handling fee on customers

Have movie ticketing applications and websites like BookMyShow and PVR been wrongly charging customers ‘internet handling fees'?

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It is a lot easier to book a movie ticket online through an application on your mobile phone or a website on your computer, but have you ever wondered what this extra ‘internet handling fee’ that you pay against each ticket means?

An RTI query with the Reserve Bank of India (RBI) reveals that these platforms providing movie ticket booking services do not have any authority to levy handling fees on customers and that they are in violation of the RBI’s Merchant Discount Rate (MDR) regulations.

The MDR is a payment gateway fee paid by the merchant to the bank for accepting customer payments via debit or credit cards. The RBI, in its response to an RTI query filed by Vijay Gopal, the president of the Hyderabad-based ‘Forum Against Corruption’, stated that the fee has to be paid to banks by merchants for internet-based online transactions. But when it comes to movie tickets, this fee is now being passed on to the consumer by online ticket booking portals, like BookMyShow for instance.

For example, a ticket for a movie booked through the BookMyShow portal costs Rs 157.82 while the ticket for the same movie costs just Rs 138 when booked at the box office at PVR at a mall in Hyderabad.

The portal charges Rs 19.82 as internet handling fees that comprises a booking fee of Rs 16.80 and Rs 3.02 Integrated GST (IGST) at 18%. Most of us don’t mind paying this little extra cost to beat the queue, however, this Rs 16.80 is to be paid by BookMyShow to the bank and not by the customer.

BookMyShow gives all theatres featured on their portal an option to levy the payment gateway fee on the customer in the form of internet handling fees, when in fact, the theatres are supposed to pay that amount to the bank for each debit/credit card transaction.

Forum Against Corruption moved a consumer court in Hyderabad against BookMyShow and PVR, as well as the Department of Information Technology under the Ministry of Electronics and Information Technology. The case is expected to be heard on March 23.

“When we go to shopping malls, these payment gateway charges are not included in our bills. If a product costs Rs 100, you pay Rs 100. But here, PVR and other movie theatres don't want to give up a cut from their revenue to the banks and so portals like BookMyShow give the theatres an option to either bear the payment gateway charges or pass it on to the customer,” says activist Vijay Gopal who filed the case. He adds that it was an absurd argument made by such firms that the customers can be charged handling fees because of ‘other services’ being offered. “Are not the cost of the services included in the cost of the ticket?” he wonders.

However, Harish Anand Thilakan, CEO, Influx Worldwide, that built the ticketing apps of PVR Cinemas, Inox and Cinepolis amongst others in India, and for over 26 other cinema chains globally, says that the cost is essential to ensure that a premium service is provided to consumers.

"This particular fee covers more than just TDRS. The cost actually encompasses the 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," he told TNM.

Those who wish to complain about deficiencies in customer service against such RBI regulated entities can do so here. To report a violation by a merchant, one will have to approach the bank that was used by the merchant to make the transaction, but in most cases, the information is often not made available to the customer making the payment.

If the bank takes no action within 30 days or if the bank's answer is not satisfactory, the consumer can approach the office of the Banking Ombudsman. In the meantime, these firms can keep levying their internet handling fees on the consumer as the RBI has no regulations in place to penalise a merchant violating the MDR charges regulations.

BookMyShow refused to comment. PVR is yet to respond to TNM's questions. This story will be updated as and when PVR responds.