Paytm, isn't the 2% fees on credit cards a step back for cashless India?

Adding money to your Paytm wallet using a credit card costs dearer. But between promoting digital transactions, isn’t it more of a step back? Here’s what we think.


Paytm, on Wednesday announced that it will now start charging a two percent deposit fee when you load money in your wallet using a credit card. According to the company, the reason for this move is to curb the misuse of zero-fee transfer which savvy users were using as a mode to rotate cash from their credit card to their Paytm wallet. Only to later withdrawing it into their bank account. However, more than the charges, there were more questions than answers.

Paytm elaborated the issue by saying that savvy users (employees of national financial institutions) exploited the mode to rotate money. It is where they got interest-free credit period for buying a product, and the loyalty points from banks for using credit card. But in the whole process of getting these freebies, it was Paytm who had to foot the bill between credit card, card networks and issuing banks.

However, Paytm will not be charging anything extra for users who load money in their wallet using debit cards, netbanking, UPI and IMPS modes. Also, to ensure genuine users don’t lose money when using their credit cards, Paytm will be returning the two percent charge in the form of discount coupons. After you add money using credit card, the discount coupons will be sent within 24 hours by email or an SMS. However, to be eligible for the coupons, you will need to load at least Rs 250 using your credit card. Also, while these coupons can be used for shopping on Paytm, making bill payments, recharges, buying bus and air tickets, it will only be applicable when using the Paytm app. ALSO READ: Paytm’s 2% charge for adding money using credit cards invoke strong social media reactions

The real problem with Paytm’s move

Ever since demonetization of old Rs 500 and Rs 1,000 currency notes, the government has been pushing digital payments. With modes such as UPI, USSD based mobile banking, and mobile wallet apps such as Freecharge and Mobikwik, Paytm has been the face of digital payments. This is evident from the fact that almost everyone — right from tea and vegetable vendors, to hotels and general stores have started accepting Paytm. In fact, cabs and auto-rickshaws drivers accepting Paytm is also a common sight these days.

Now, with the government and wallet companies pushing digital payments — why is there a discrimination between using credit cards and other modes of funds transfer modes. If the goal is to turn India in a cash-less economy, you shouldn’t levy charges on using digital modes of payments. Instead, charge extra on making cash-based transactions. ALSO READ: Paytm now has over 200 million e-wallet users

As a consumer, I should have the option of using whatever mode I am comfortable with. And even if Paytm has been taking the burden of credit card transactions till now, why start charging customers all of a sudden? Isn’t it surprising that the move comes at a time when the digital wallet company has managed to get a lot of customers on its platform — the surge coming mostly in just a few days after the demonetization announcement. In a way, levying two percent charge appears like penalizing users for using credit cards.

But, then again, isn’t the move a step back? When promoting plastic money, it shouldn’t matter as to whether users are using credit cards or debit cards or internet banking or UPI. BGR India has reached out to Paytm for comment, and the post will be updated accordingly. ALSO READ: Paytm launches new e-commerce platform ‘Paytm Mall’

Meanwhile, there has been some backlash on Twitter, with users are not looking happy. Recently, HDFC Bank, ICICI bank and other banks started charging Rs 150 on cash deposits and withdrawals after four transactions in a month. While this could be a good move to ensure as many people shift to digital modes, charging for card transactions may not do any good. Most users on Twitter feel it’s a wrong decision and a ridiculous step – something that could make it difficult for users, rather than making it easier.

BONUS VIDEO: How to use the BHIM (Bharat Interface for Money) Android App for UPI payments

  • Published Date: March 9, 2017 2:50 PM IST
  • Updated Date: March 9, 2017 2:51 PM IST