50% of Indians pay online convenience fees; 78% prefer free platforms

Business Standard

6 hours ago

Convenience fees have emerged as a persistent burden for Indian consumers, with one in two people—50 per cent—saying they pay such charges on the majority of their online purchases, according to a recent LocalCircles survey.
These fees, once limited to select categories, now span e-commerce platforms, digital payments, and ticketing services, impacting millions of online shoppers across the country.
Services most affected by added charges
The survey found that 62 per cent of consumers reported being charged convenience fees for most of the tickets or services purchased online. Among them, 37 per cent said they were charged for all online services, while 25 per cent said they paid fees for a majority of services.
Product purchases not spared
Online shopping for everyday goods is similarly impacted. The survey revealed that 52 per cent of respondents paid convenience fees on most product purchases. Of those, 19 per cent said the fee applied to all items they bought online, and 33 per cent said it applied to the majority.
Strong preference for fee-free platforms
A significant 78 per cent of surveyed consumers said they are 'very likely' to prefer platforms that do not charge convenience fees on products or services. Another 12 per cent said they are 'somewhat likely' to do so—meaning 90 per cent expressed a clear preference for fee-free alternatives.
Amazon's new fee and sector-wide trend
The issue has gained fresh attention with Amazon India recently introducing a ₹5 marketplace fee on every order, including those placed by Prime members. Other platforms—Blinkit, Zepto, Swiggy Instamart, BigBasket, and Ajio—have also imposed similar charges. Digital services and gift cards remain exempt.
Regulations in place but poorly implemented
According to the Reserve Bank of India's 21 April 2022 notification, a convenience fee 'shall be indicated to the cardholder in a transparent manner, prior to the transaction.' It defines the fee as a fixed or pro-rata charge for using credit or debit cards where such methods are not ordinarily accepted.
Despite this, the survey highlights transparency concerns. 'Hardly any company or portal displays this information up front,' it states.
Fees extend beyond online platforms
The problem is not confined to digital commerce. Many brick-and-mortar stores reportedly levy surcharges for card payments, especially with credit cards. The fees often vary but can reach up to 3 per cent of the transaction value. In extreme cases, such as school fee payments via credit card, some parents reported charges exceeding ₹2,000.
Survey methodology and demographics
The LocalCircles survey collected over 40,000 validated responses from consumers across 321 districts. Respondent demographics included:
64 per cent male, 36 per cent female
42 per cent from tier 1 cities
22 per cent from tier 2 cities
36 per cent from tier 3, tier 4 and rural areas