Faced with shrinking interest incomes,  

Banks watching   their profits are working on strategy to increase their fee income. They are all set to increase the merchant fees on their Point of Sales (POS) machines.

Credit card majors like ICICI Bank, HDFC Bank and Axis Bank have started issuing letters to retailers informing them about the fee hike. The three majors account for 90-95 per cent of the market share in this segment.

Any institution which uses the POS machines on which credit or debit cards are swiped, bank charges a merchant fee on it.

The fee mainly depends upon the merchant's capability to generate business. Normally bank charges a fee of 1per cent to 1.1 per cent of each transaction. Now banks are intending to hike the fees by 0.1-0.2 percentage points and for premium cards the hike would be 0.8 percentage point