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Updated: RBI says user needn’t pay handling fees for online movie ticketing: RTI

Update, 25 March:

Pallav Narang, Partner at CNK RK, told MediaNama,

  • “The RBI has merely said that it has not provided a separate authorization to the portal to collect such fees. This does not mean that the fee is automatically ultra-vires, the RBI is merely stating the situation as it exists right now.
  • With respect to MDR charges, while the existing circular limits such charges it does not preclude the merchant from levying additional charges and recovering them from the customer.”

Previously, 18 March:

Update: BookMyShow told MediaNama that the handling charges are usually levied only on movie tickets and not on events seen in the Activities tab.

Earlier today: The RBI has said that a user need not pay extra fees (usually the service’s handling charges) to book online movie tickets (specifically on BookMyShow), in response to an RTI filed by Vijay Gopal, the founder and president of ‘Forum Against Corruption’, a Secunderabad based body, reports The News Minute.

The RTI asked whether the RBI had authorised BookMyShow to “levy or take separate charges on consumers calling it internet usage fee” to which the RBI said that it had not.

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The report added that BookMyShow’s handling charge was a violation of the RBI’s Merchant Discount Rate (MDR) regulations, which state that this charge needs to be paid by the merchants to the banks for internet based transactions. However, in the case of platforms like BookMyShow, this fee was borne by the end user. In this case, BookMyShow, not the user, needs to pay this fee to the bank.

Gopal told The News Minute that these companies did not want to bear the cost of this charge which they owed to banks because it would cut into their revenues. Therefore they had passed it on to the consumer. Gopal told The Logical Indian that online cab booking and food delivery services were also using this practice.

Following the RBI’s response to the RTO, Forum Against Corruption has moved a Hyderabad consumer court against BookMyShow and PVR, and MeitY’s Department of IT, and the case will be heard on 23 March.

BookMyShow refused to comment to MediaNama on the matter stating that it was sub judice.

High cost of ticketing engine infrastructure

Influx Worldwide, which built PVR, Inox and Cinepolis’ ticketing apps, told The News Minute that “the cost is essential to ensure that a premium service is provided to customers.” It added that the fee included “the pretty large spends” that cinemas had to make to run online ticketing engines whose infrastructure cost was very high.

Gopal’s RTI also asked if the RBI circular DPSS.CO.PD No.1633/02.14.003/2017-18 (pdf), dated 6 December 2017, applied to internet based payment transactions and if not, why. This circular cut the MDR on card payments and introduced a different payment regime for alternative payment means like QR codes. To this question, the RBI said that the circular was applicable to internet based payment transactions.

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Also read: MDR guidelines for debit cards: Industry heads ask for more equitable share

User handling fee not visible on Activities tickets

Note that BookMyShow is not currently showing this user handling fee on its newly launched Activities vertical. It is unclear if the total cost of the ticket of an event includes this handling fee, because where a user proceeds to checkout, there is no itemised breakdown of the ticket price.

Financials and statistics

BookMyShow’s parent company investor company Network18 reported consolidated revenues of Rs 1538 crore in the quarter ended December 31, 2018 (Q3FY19), a 250% jump from the same quarter last year. For the quarter, BookMyShow witnessed 7 million app downloads, managed ticketing for Pro Kabaddi League for 4 teams, football league ISL 2018, and electronic music events. It entered into live event and theatrical production.

In July 2018, BookMyShow’s parent company Big Tree Entertainment raised Series D funding of $100 million led by TPG Growth, with participation from existing investors.

*

Edit: We’ve updated the article to reflect that Network18 isn’t BookMyShow’s parent company, but an investor. BookMyShow’s parent company is Big Tree Entertainment Pvt Ltd. We regret the error. 

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Written By

I'm a MediaNama alumna from 2015-16 (remember TinyOwl?) now back to cover e-services like food and grocery delivery, app based transport and policies, platforms and media in India.

MediaNama’s mission is to help build a digital ecosystem which is open, fair, global and competitive.

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