UPDATE: Due to inconvenience faced by customers, Paytm has rolled back its 2% fee on recharge via credit card policy. The company announced the same in a blog post stating,
We will introduce new features to prevent credit card misuse in add money. We are suspending 2% charge on credit cards for adding money to wallet keeping users’ convenience in mind.
PREVIOUSLY: Alibaba-backed Paytm will now levy 2% fee on recharges done via credit cards. The company is charging the transaction fee so as to prevent misuse of its zero-fee transfer policy. As per the Paytm team, many of its users were rotating the cash simply to earn free top ups and reward points. The additional fee on credit card recharges will hence make such users think twice before they head for a cash transfer.
The company further declared that it will provide cashback coupons of the equivalent amount which could be utilized on Paytm. These coupons will also work on third-party sites – to pay for Swiggy or Uber receipts. However, Paytm is still to integrate the mechanism for it. Reasoning out the fee levied, the company’s blog post reads as under,
Paytm pays hefty charges when you use your credit card at card networks and issuing banks. If a user simply adds money and takes it to the 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.
Post demonization, the company initiated its 0% platform fee to attract small merchants to accept payments to their wallet. It allowed users to cash out their wallet to bank accounts at no charge. Along with it, the company didn’t charge any fee to transfer money back into their system. This meant that credit card users deposited money from bank to their Paytm wallet to earn rewards and transferred it back — all at zero cost!
The 2% fee will be applicable with effect from March 8, adding to that Paytm will issue refund coupons only if the amount filled up is more than Rs. 250. The company further clarified that Paytm will only make money on transactions made within Paytm ecosystem. This suggests that credit card users transacting on the Paytm marketplace, booking tickets and paying utility bills on the platform will not be charged the said fee.
These refund coupons will expire on 31st December 2017, the limit of which can be extended on request. The coupons will be provided on every credit card top up but cannot be clubbed together. This means each coupon has to be applied individually. A debit card, net banking or UPI/ IMPS payment user will not be affected by the digital wallet’s latest move.
