Paytm to charge 2% on adding money to wallet using credit card

In a bid to check rampant 'misuse' of credit cards for wallet recharge, Paytm on Wednesday announced that it will levy a 2 per cent charge on adding money to wallet using credit cards.

However, there will be no fee when you shop on Paytm or pay for any utilities using your credit card or any other payment option.

The company said its new payment platform allows small merchants to transfer money to banks without any fee. "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," the company said in a blog post.

"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," it added.

Alibaba-backed digital wallet firm said it pays fee to card networks or banks whenever users pay using credit cards. "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," the company said.

However, Paytm said the 2 per cent fee charges on credit card would be reversed in the form of a discount coupon for same amount. Paytm also announced addition of two new payment options - UPI & IMPS.

Two per cent discount coupon will be sent within 24 hours of adding money using credit card. This change applies from March 8th. The company said customers need to spend at least Rs 250 using a credit card to be eligible for this offer.

New payment option UPI is available on both Paytm app and the website. And IMPS  is currently available only on Paytm website to add money. 

Last month, Paytm e-commerce has announced the launch of its new Paytm Mall app on Android. The Paytm Mall will come with over 17 fulfillment centers across India.

Here's the full text of some FAQs Paytm posted on its blog:

Q. When will I get the gift voucher in lieu of 2% credit card fee?
A. You will receive a gift voucher totaling the same amount charged to you as fee in an email & SMS within 24 hours of adding money

Q. Where can I use that gift voucher?
A. You can use that gift voucher on Paytm for various services including recharges, bill payments, movie tickets, shopping, bus tickets, Air tickets & all other services on Paytm. However, you can not use this voucher on Add money transaction

Q. Will it be a promo code? How do I use that?
A. Gift voucher will contain a unique promo code. When you are making any purchase on Paytm or doing a checkout from our cart, you will see a promo code field where you can apply this coupon. Amount will be given as an instant cashback post your transaction

Q. Can you explain the value of gift coupon that I will receive?
A. For example, if you added 500 to your paytm wallet, you would have been charged 2% = Rs.10 as credit card fee. You will then get a gift voucher worth Rs.10 in your email/SMS.

• While doing a checkout on Paytm, please use gift card code shared with you.
• If you doing a purchase of Rs.10, you will get a cashback of Rs.10
• If you doing a purchase of Rs.20, you will get a cashback of Rs.10
• If you doing a purchase of Rs.5, you will get a cashback of Rs.5
• This cashback will be given instantly in your wallet which can be used for subsequent transactions on Paytm

Q. Can I use this gift voucher on your partner Apps/websites?
A. No, this voucher can only be used in Paytm App

Q. I add money using credit card on Uber, will I be charged 2% there?
A. No, there won't be any charge on partner Apps including Uber when you add money using a credit card.

Q. What will be the expiry date of this gift voucher?
A. This gift voucher will expire on 31st December 2017. For some reasons, if you fail to use the voucher, you can write to us to get it extended. Reach out to us at paytm.com/care

Q. Can this voucher be used partially? If I get a voucher of Rs.50, can I use it multiple times till Rs.50 gets exhausted?
A. No, you have to use this voucher at one go. This voucher is only applicable once

Q. If I do multiple Add money transactions, do I get this voucher every time? Can I club these vouchers?
A. Yes, you will get a new gift voucher every time of the credit card fee charged to you. No, you won't be able to club it. You will have to use them separately

Q. Do I have to pay 2% every time I do any transaction on Paytm?
A. No, this 2% is applicable only on Adding money to wallet. There will be no charge if you use your credit card to pay your bills, do recharges or make any purchase on Paytm directly. There is no credit card fee on transactions done using Paytm in our partner apps like Uber, Zomato, Big Basket, Swiggy and all other Apps that use Paytm Wallet.

Q. Is there any fee on Debit cards, Net Banking, UPI or IMPS?
A. No, all other payment modes have no fee whatsoever.