You may have encountered business places where merchants are still reluctant to accept payments through credit/debit cards, giving the reason that it would cost a bit extra to you as compared to the cash payment.
Although that extra charge is usually supposed to be paid by the business and not the customer, PayTm has now taken a step to completely eliminate that fees for digital transactions made through its platform.
The fees commonly known as ‘per transaction fee’ is the fees incurred by the merchant every time it processes an electronic transaction. It generally constitutes 0.5-%1.75% depending on the payments service provider.
Often these charges discourage a merchant to accept a digital transaction and they end up asking the consumer to bear the cost, which is illegal. By eliminating this cost, we are looking at an opportunity to digitise that 95% of India which still deals in cash,
said Nitin Misra, payment products head at Paytm.
This is indeed a crucial step towards encouraging cashless transactions in the country where around 96% transactions are still cash based (as per a report by India Development Fund and Internet and Mobile Association of India).
The road is not going to be smooth for PayTm as despite being the most popular mobile wallet today, very few people use it beyond mobile/DTH recharges, bill payments, etc. and the wallet use by offline merchants is still in its nascent phase.
However, the early growth signs are certainly positive. It has been three months since PayTm entered the offline transactions and according to the company, they are already doing 3.5 million offline transactions every month making it their fastest growing business.
According to RBI, there are about 1.3 million PoS locations where cards are accepted for payments. And PayTm aims to reach 2.6 million offline merchants by the end of March next year.
The company has already engaged more than 600 people and is adding 100 every month. It has about 100,000 merchants so far and claims to be adding more than 7,000 every day.
Above all, PayTm boasts of nearly 120 million wallets, which is nearly six times higher than the number of credit card users. And the company expects to further reach 500 million by 2020.
This puts it in a better position to capture the offline consumer-merchant digital transactions and now that it has scraped the “per transaction fee” as well, it would further boost its prospects.
Among other efforts to encourage digital payments in the country, there is a PayTm payments bank coming up after June this year. The company is also in talks for tie-ups with Metro rail service in Delhi & Mumbai; transport authorities in North and South India for enabling wallet payment for toll services; and at least 3 major supermarkets chains.