On Wednesday, Digital Wallet player in India Paytm announced to charge a fee of 2% for adding money to your wallet using Credit Card. This has been done because multiple users were using Paytm to get free credit by using Credit Cards to top up their digital wallets and transferring the money back to their own bank accounts at zero transaction cost.
Paytm explained that savvy users were just rotating their cash in order to earn ‘free’ money in the form of reward points. Paytm said that to ensure that genuine users don’t lose their money, it will return the 2% charge in the form of coupons that can be used on Paytm only. Paytm doesn’t charge any fee for transferring back the money from wallet to bank account.
Paytm in its blog has mentioned that “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.”
Later, founder of Paytm Vijay Shekhar Sharma, cleared that the coupons can also be used on 3rd party sites like Swiggy or Uber, although this mechanism has not been activated yet.
This coupons can also be used for bill payments, recharges, and so on, these are not limited to shopping on Paytm only. The vouchers will expire on December 31, 2017, but the FAQ mentions that this can be extended on request if made.
These charges are only being applied on credit card users, so if you’re using a debit card, net banking, or UPI/ IMPS payments, then you are not affected by this move.