E-commerce: Why the price you see is not what you pay, Pg11

Key Highlights:

• The debate over Merchant Discount Rate (MDR) on UPI transactions has highlighted additional charges in online services.
• Online platforms across sectors like food delivery, e-commerce, entertainment, and travel commonly levy platform fees and convenience charges.
• These charges, initially small, have become significant revenue streams for companies, such as IRCTC which earned over 18% of its total revenue from convenience fees in Q1 2026.
• Online platforms also employ 'dark patterns' like 'basket sneaking' and 'drip pricing' to obscure the final price and manipulate consumer choices.
• The Central Consumer Protection Authority (CCPA) has intervened, fining companies like Zepto for 'basket sneaking' and issuing the Guidelines for Prevention and Regulation of Dark Patterns, 2023.

MDR.jpg

Detailed Insights:

• Platform fees and convenience charges are now standard across major online consumption categories, including food delivery (Swiggy, Zomato), e-commerce (Amazon India), and ticketing (BookMyShow, IRCTC, airlines).
• These charges contradict the notion that digital transactions reduce costs for service providers by eliminating physical infrastructure and staff.
• The term "convenience charge" is ironic, as online transactions primarily benefit the service provider by streamlining operations.
• The CCPA imposed a fine of ₹7 lakh on Zepto for 'basket sneaking,' where additional handling charges and membership fees were added without explicit consent.
• 'Drip pricing' is a prevalent dark pattern where the full price is not revealed upfront, with mandatory fees incrementally added during the checkout process.
• The Guidelines for Prevention and Regulation of Dark Patterns, 2023, issued by the CCPA under the Consumer Protection Act, 2019, aim to curb deceptive design practices that mislead consumers.

Key Concepts Involved:

• Platform Fee: A charge levied by online platforms for using their service, often added to the final price of goods or services.
• Convenience Charge: An additional fee imposed for the perceived convenience of using an online service, despite the service provider also benefiting from digital transactions.
• Dark Patterns: Deceptive user-interface designs that manipulate or trick consumers into making unintended purchases or sharing data.
• Basket Sneaking: A dark pattern where platforms automatically add extra products or services to a user's cart without explicit consent.
• Drip Pricing: A deceptive sales tactic where a low initial price is advertised, and mandatory fees are revealed incrementally during the checkout process.