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Paytm begins passing on MDR fees to customers from today: report

In an attempt to reduce its burn rate and turn a profit, Paytm will begin passing on the merchant discount rate – the fee that card companies and banks charge for processing digital transactions – to customers from today, the Economic Times reports, citing two people familiar with the development. One of the sources told ET that this amounted to an additional 1% fee on payments through credit cards, 0.9% on debit cards and up to Rs 12-15 for transactions through net banking and the Unified Payments Interface (UPI). The new fees will apply to all modes of digital payments, including topping up the wallet, the report said. A Paytm spokesperson told Medianama in a statement that the company itself does not charge customers a convenience or transaction fee for using any payment method – cards, UPI, netbanking or wallet – and has no plans to do so in the future.

Meanwhile, the RBI’s decision to waive all charges on fund transfers through the Real Time Gross Settlement System (RTGS) and National Electronic Funds Transfer (NEFT) System also comes into effect from today, Livemint reports. Until now, the central bank charged banks for transfers through RTGS and NEFT, and banks in turn passed on these charges to their customers. But last month the RBI said it would scrap the charges, and that that banks would be required to pass on the benefits of zero charges to their customers. RTGS is used to transfer large amounts (minimum ₹2 lakh) between bank accounts instantaneously. National Electronic Funds Transfer (NEFT) System is used to transfer funds between two accounts at NEFT-enabled banks. There is no general upper limit, but individual banks may put an amount limit on NEFT transactions.

NPCI slashed UPI fees in April

Mobile wallets, and debit and credit cards have been facing stiff competition from UPI, a mobile-based, real-time payment system, which has grown quickly since its launch in 2016. In April, the National Payments Corporation of India’s (NPCI), which runs UPI, slashed usage fees for small transactions to encourage banks and payment service providers (PSPs) to adopt the system. The NPCI reduced:

  • charges on transactions up to Rs 1,000 from 25 paise to 10 paise while keeping the charge for transactions above Rs 1,000 unchanged at 50 paise.
  • incentive payments to a flat 10 paise per transaction. Earlier, these were charged at the same rate as normal transactions. Incentive payments are charges banks or PSPs pay NPCI when they credit the user’s bank account with cashbacks.
  • merchant transactions to flat 10 paise plus a 0.04% levy that will be split between the acquiring bank and the issuing bank. Merchant transactions up to Rs 1,000 earlier attracted at 25 paise fee, while those above Rs 1,000 were charged at 50 paise.

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    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ