Paytm to charge 2 percentage fee on loading wallet via credit card

Paytm to charge 2 percentage fee on loading wallet via credit card

"We will put 2% fee (inclusive of taxes) only on adding money to wallet using credit cards while adding money using any other payment option remains free," Paytm said in its statement.

New Delhi, Mar 9: E-commerce application Paytm on Wednesday announced it will now levy a 2 percent charge for adding money into the wallet using credit cards. The 2 per cent fee, inclusive of taxes, would be charged whenever the wallet would be loaded through the user’s credit card. The decision is expected to impact a large number of Paytm users. Paytm will provide an equivalent amount of cashback for using credit card to add money to the wallet. Paytm users can add money to their wallets through other modes such as netbanking and debit cards without any extra cost.

“To avoid this misuse, we are making some changes in our terms. There will be no fee when you shop on Paytm or pay for any utilities using your Credit Card or any other payment option but to avoid the misuse highlighted above, we will put 2% fee (inclusive of taxes) only on adding money to wallet using credit cards while adding money using any other payment option remains free,” Paytm said.

“However, this 2% fee charges on credit card would be reversed in the form of a discount coupon for same amount which will be issued within 24 hours of adding money effectively giving you this fee back. This hopefully keeps unintended misuse of our platform away and as a consumer you still enjoy our services at no extra cost,” the statement further read.

The company also announced a slew of other changes as follows:

At Paytm we allow multiple payment options when you buy any product or pay for any utilities. We offer you to pay using Credit Card, Debit Card & Net Banking. Now, we are also adding 2 new payment options — UPI & IMPS. All these payment options are also available when you add money to your wallet. Every day millions of our customers use various methods to pay for products/services or add money to wallet.

As you are aware, in the month of November we launched a new payment platform for small merchants at 0% fee. Millions of merchants are accepting Paytm at their shops/establishments. They prefer to take money to their bank accounts and as a promise to democratizing payments, we made transfer to bank fee at 0%. This was extended to all our users as many shopkeepers/merchants also used their personal Paytm accounts to accept payments at their Shops.

This 0% transfer to bank fee left an opportunity to misuse this great service meant for our valuable customers. We saw a disturbing trend when many users started funding their Paytm wallet with their credit cards and transferring it to the bank all for free. They were not only getting free loyalty points which effectively is free cash but also getting access to free credit.

Incidentally, Paytm pays fee to card networks or banks whenever you use any payment instrument like any other online commerce company. Paytm pays a hefty charges when you use your credit card to card networks & issuing banks. If user simply adds money and takes to bank, we lose money. Our revenue model requires users to spend money within our network and we make money from the margins available to us on various products/services we offer.

We understand many of us use credit cards for consolidating all our monthly payments and using it to get a credit period for buying a product/service but this disturbing trend of using credit cards to rotate cash affects our ability to serve our valuable customers.

Some financially savvy users (surprisingly many of them employees of national financial institutions) exploited this model to rotate money. This may surprise normal users like most of us but for a savvy user it meant freebies at Paytm’s cost.

Paytm grew its user base in an unprecedented manner following the demonetisation drive carried out by Prime Minister Narendra Modi. Due to unavailability of cash, people downloaded the e-commerce application for cashless transactions. Within 10 days following the demonetisation drive, Paytm recorded a total of 7 million transactions.

Source:India.com