A New Delhi-based consumer commission on Nov. 9 ruled in favor of a local garment merchant in its dispute with Mumbai-based ICICI Bank Ltd. over two credit card transactions the merchant said the bank failed to process properly.
The Central Delhi District Consumer Commission ordered the bank to pay 100,000 (US$1,993 or 1,460 euros) rupees to the merchant to cover the cost of the transactions in question, plus 20,000 rupees in damages, including the merchant’s litigation costs.
The commission said in its written judgment that ICICI Bank’s actions amounted to “deficiency in service,” after it did not pay the merchant 91,350 rupees for two credit card transactions initiated with an ICICI Bank card payment terminal.
The merchant in 2008 swiped the credit cards of two customers through the ICICI terminal, and although the transactions were approved, the merchant did not receive the funds, a commission spokesperson tells PaymentsSource.
“The bank argued that the transactions were done without taking proper authorization,” and bank policies allow it to withhold payment to the merchant if the authorization is incomplete, the spokesperson says.
The commission overruled the bank’s argument, noting that the bank had charged the merchant a fee for the transactions, making it liable, he adds.
The decision marks one of the few instances when a merchant in India has taken on a bank and prevailed in such a dispute, Mrinalini Manral, an independent banking analyst in Mumbai, tells PaymentsSource.
“Mostly, given the size and reach of these big banks, merchants tend to play safe with them and abide by whatever (banks) say,” she says. “But as the consumer is getting more aware of how card transactions work, so are merchants.”
Manral speculates that the commission’s decision may empower more merchants to challenge banks over mishandling of funds or other services, “as they are now more educated and more aware of how to ask for their rights.”
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