Paytm will now cut 1% from every transaction (GST included) for payments merchants accept into their Paytm Wallet. Previously, the company would cut around 2% from merchants who received more than Rs 20,000 per month, while those who received less would not have to pay anything at all. Paytm announced this short-notice change, which applies from today, in a notification to Paytm for Business users sent yesterday. As before, merchants will not have to pay any fee if they choose to receive money into their bank accounts instead of into the Paytm Wallet.
In January, Paytm CEO Vijay Shekhar Sharma had a mixed reaction to the government suspending such fees on UPI and Rupay transactions. “While I am on the side of MDR becoming zero being a good thing for the merchant, the government should reimburse people who are acquiring merchants,” Sharma had told the Economic Times. In January, we wrote about how zero MDR in Rupay and UPI discourages the rollout of digital payments infrastructure by banks, while creating the perverse incentive to mine transaction data for sale as an alternate way to monetise.
It is unclear how many Paytm merchants will be affected by this policy change. We have reached out to them for comment. Assuming the majority of Paytm merchants collect less than Rs 20,000 a month through the wallet, the company’s coffers will benefit, as even though the MDR is lower, more merchants will be paying it. For bigger merchants, the change should come as a relief as this move effectively halves the commission paid out to Paytm by them. Of course, switching to UPI would let these merchants get that number down to zero.