How Instamojo Convenience Fee is Taking Away The Cost Burden On MSMEs in India?
Business 485

How Instamojo Convenience Fee is Taking Away The Cost Burden On MSMEs in India?

How Instamojo Convenience Fee is Taking Away The Cost Burden On MSMEs in India?

Did you know a small business in India has to bear at least 5 different charges if they are selling online? Marketplaces and payment gateways often charge MSMEs huge fees which can hamper cash flow and affect overall operations for a small business.

To help MSMEs beat the cash crunch, Instamojo introduced the convenience fee option that allows the merchant to pass the fee on to their customers.

What is Convenience Fee:

From a buyer’s point of view, convenience fees are small charges levied by the platform/seller for the convenience of accessing the product/service online. Many platforms like BookMyShow, Cleartrip, IRCTC, etc. charge customers a small fee on the MRP.

From a seller/platform’s point of view, convenience fee is charged on relatively small ticket size transactions. This feature is used across different segments of business in various formats. It is usually a flat fee or a percentage of the transaction which is generally used as a means to cover operational costs or a source of revenue.

How Different Platforms Charge Convenience Fees

Here are some examples of convenience fees/internet handling fees charged on popular platforms:

In this example, BookmyShow is charging Rs.40 per ticket as internet handling charges. The final amount is inclusive of the extra charges.

Booking-Summary

Here’s another example of Cleartrip charging a fee of up to Rs. 200 on the privilege of using the booking services.

Booking-Services

How Instamojo Convenience Fee works:

Instamojo convenience fee is a feature where any seller on the Instamojo platform can shift the Instamojo payment gateway fees to the buyer. The seller gets what they charge as MRP in their bank account and the Instamojo fees are shifted to the buyer.

Here is an example:

Convenience-Fee

The standard convenience fee charge at Instamojo is 3% + Rs.3 on a successful transaction.

What’s more? Instamojo also allows sellers to choose if they want to charge convenience fees to their customers. Sellers have the option to turn it off from the dashboard at any time.

Instamojo-Setting

How Instamojo convenience fee is taking away the cost burden from MSMEs

Just like moviegoers don’t mind paying about Rs. 50-70 on ticketing platforms and Rs.150-200 on airlines or hotel-booking sites, buyers do not mind paying a small fee for products and services on Instamojo.

Most small businesses have to pay huge commissions to platforms to set up and use their services. Allowing the sellers to shift the fee to their customers helps businesses get what they charge in their bank accounts without having to worry about a cost margin impact.

Here’s a case study on GetLook – a beauty-at-home/ on-demand salon service provider that uses the Instamojo convenience fee.

“By switching it (Instamojo convenience fee) on, we have now transferred the Instamojo fee to the customers. As it is only two (currently 3%) percent, the customers do not mind it. This essentially means a fee of only Rs 20 on a bill of Rs 1000. It’s a small amount for the customer but culminates into massive savings of lakhs for us.” – Gaurav Maheshwari, co-founder and CEO, GetLook.

Combining the convenience fee with other Instamojo features like Instant payouts allows the seller to immediately get the money in the bank account and not worry about cash flow/ working capital problems at all.

Instamojo is a great platform to start, manage, and grow your business online. It is available on both desktop and mobile app to help you track your business on the go.

You must be logged in to post a comment Login

Leave a Reply