Bank Charging Foreign Currency Markup on INR Transactions: How to Claim a Refund

by

Root Cause Diagnosis

Issuers apply the markup based on how the card network classifies the transaction, not on the currency on your checkout page. A transaction priced in INR is still flagged cross-border when the merchant is foreign-registered or is processed through a foreign acquirer or payment service provider. A payments vendor’s analysis reports that Indian banks can treat such an INR payment as foreign and add a markup of roughly 1 to 3.5%. The charge appears as a separate fee line (for example “Forex markup” or “Cross currency markup”) plus a GST line, so the parent transaction looks domestic. A refund is only justified if the fee is not covered by your card’s disclosed terms, the transaction was actually domestic, or the amount or tax was miscalculated.

Quick Fix

  1. In your statement, find the fee line and its GST line, and match them to the parent transaction by date and amount.
  2. In the issuer app, raise a request under something like Support > Service request > Dispute a charge or fee. Labels vary by issuer. If there is no such option, call customer care.
  3. Use this text and keep the reference number:
Card ending XXXX. A foreign currency markup of INR <fee> and GST of INR <gst>
was charged on DD-MMM-YYYY against an INR-denominated transaction of
INR <amount> at "<merchant descriptor>". Please state the clause of my MITC /
schedule of charges that allows this fee on an INR-billed transaction, the
acquirer country you classified it under, and reverse the fee and GST with
any interest accrued on them if no such clause applies.

Step-by-Step Resolution

1. Compute what was actually charged

txn_inr = 999.00
fee     = 34.97   # markup line on statement
gst     = 6.29    # GST line on the markup

print(f"implied markup: {fee / txn_inr * 100:.2f}%")  # compare with MITC rate
print(f"GST on fee:     {gst / fee * 100:.1f}%")      # expect 18.0%

Two checks come out of this:

  • The implied markup should equal the rate in your MITC or schedule of charges.
  • GST at 18% is levied on the markup amount only, not on the whole transaction value. A GST figure above 18% of the fee, or GST computed on the full amount, is a clear error.
See also  Step-by-Step Procedure to Unblock a Bank Account Frozen by a Cyber Crime Police Notice

2. Establish how the transaction was classified

Gather indicators that the transaction was treated as international:

  • The descriptor shows a non-Indian country code.
  • The merchant’s invoice names a foreign legal entity (no Indian GSTIN).
  • The merchant uses a global payment provider.

For comparison, check purchases from Indian-acquired merchants made in INR on the same card. If those carry no markup, the issuer is classifying by acquirer or merchant country.

Ask the issuer in writing for:

  • The transaction type it recorded (domestic or international).
  • The merchant country and acquirer country.
  • The fee rule or code applied.

3. Read the controlling document

Open the MITC and schedule of charges that apply to your card, from the issuer’s website or your welcome kit. Find the foreign currency transaction fee clause and note its exact wording:

  • “Transactions in foreign currency” supports your claim if the transaction was billed and settled in INR.
  • “International transactions”, “merchant outside India” or “settled in foreign currency” lets the issuer charge on INR-billed cross-border transactions.

Further points:

  • RBI’s Master Direction on credit and debit cards requires issuers to disclose forex markup rates in the MITC.
  • RBI does not set the markup percentage itself. Your claim rests on non-disclosure, misclassification or miscalculation, not on the rate being high.
  • If the clause was added or changed after you got the card, ask for the date of notice. Changes to charges are expected to apply prospectively with advance notice, so verify the notice period in the issuer’s policy.

4. File the written fee dispute

Send the Quick Fix text by email to the grievance address listed on the issuer’s website, attaching:

  • The statement page with the fee and GST lines highlighted.
  • The MITC page or screenshot you are relying on.
  • The merchant’s invoice showing the INR price.
See also  Resolving Unapplied Cashback Adjustment on Credit Card Statement Billing Cycle

Ask specifically for reversal of the fee, reversal of the GST, and removal of any interest or late charge accrued on them. Record the complaint number, date and channel.

5. If the issuer cites foreign acquiring

Ask the merchant, in writing, for:

  • The legal entity name and country.
  • The acquirer or payment provider processing INR payments.
  • Whether it can settle INR payments through an Indian acquirer.

This fixes future charges, not the past one. Your refund claim against the issuer still depends on the MITC wording from step 3. For future purchases from this merchant, use a card with zero or lower markup.

6. Escalate in order

  1. Issuer customer care, then the nodal officer, then the Principal Nodal Officer. The matrix is on the issuer’s website.
  2. RBI Integrated Ombudsman at cms.rbi.org.in. You can file there if the markup exceeds what your card terms disclose or the conversion rate is not shown on your statement. Do this after the issuer rejects the complaint or does not reply within 30 days, and within one year of the issuer’s reply.
  3. Consumer forum via e-Daakhil, or National Consumer Helpline 1915.

7. Verify the credit

On the next statement, confirm that both the markup and the GST were credited. A reversed fee should carry a reversed tax. Confirm that no interest was charged on the reversed amounts if you carried a balance.

Why This Fails for Some Users

  • The charge is disclosed. If the MITC says the fee applies to merchants outside India or foreign-acquired transactions, the issuer is within its contract, and RBI does not cap the rate. The ombudsman route then yields little.
  • INR from a foreign acquirer is cross-border. Classification follows the merchant and acquirer, not the currency shown at checkout. A fee on such a transaction is not an error, even though it surprises cardholders.
  • Merchant-side conversion is a different charge. If an overseas merchant converted the price to INR itself, its margin can run from 3 to 6% above the network rate, and this is not an issuer fee. Contest it with the merchant, or as a dispute if you were not offered a choice of currency. The issuer markup may also apply on top.
  • This is not an unauthorised transaction. RBI’s liability frameworks cover purchases you did not authorise. A disclosed fee on a purchase you made is a contractual dispute, so reporting deadlines and zero-liability protections do not apply.
  • The fee posts separately. It can appear days after the purchase, which makes it easy to miss within the issuer’s window for disputing statement items. Check your MITC for that window.
  • Card-specific schedules. Co-branded, corporate and premium cards can carry different rules. Some apply markup only to foreign-currency billing and others to all internationally acquired transactions. Use the schedule for your exact card variant.
  • Debit cards and forex cards. These follow the issuing bank’s own schedule of charges, not the credit card MITC.
  • Fix is on the issuer’s side. If the issuer’s system misclassifies transactions, the correction applies to the individual complaint. Do not assume it will be applied to future transactions without confirmation in writing.
See also  Resolving Refund Credited to a Canceled or Closed Credit Card Account

This guide is general information, not legal or financial advice. Check your issuer’s current terms and RBI’s latest directions before relying on any process.

Leave a Comment