Paytm has done a U-turn on charging 2% fees to customers opting to load money via a credit card. The payments company said on its blog today that it is suspending 2% charge on credit cards keeping users’ convenience in mind.
The company said that the 2% charge was necessitated as many users used credit cards to top up the digital wallet and transferring the money back into their bank accounts at zero transaction cost and getting free loyalty points. However, Paytm said it would give the same fee back to users as a cashback if they chose to use a credit card to add money to the wallet.
“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. 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,” it explained yesterday.
In the meantime, it added that it will be building new features to curb misuse.
Meanwhile, rival wallet MobiKwik said it was willing to bear to cost of users loading money in wallets via credit cards, as indicated by this TechCircle report. “People don’t pay anything when they use their credit cards to transfer money to their bank accounts routed through the wallet. This is the loophole. But, people who are doing it are a very small percentage, almost negligible. Hence, continuing our focus on customer acquisitions and increasing transactions on our platform, we have decided not to levy such charges,” MobiKwik told the publication.