Payments firm Paytm on Wednesday said it would charge 2 per cent fee when its wallet is loaded through credit cards to avoid “misuse” by users who were gaining access to free credit, by transferring money from credit cards to wallets and then to their bank accounts.
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“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,” the firm said in a blog.
“… in the month of November we launched a new payment platform for small merchants at 0 per cent fee. Millions of merchants are accepting Paytm at their shops/establishments…This was extended to all our users as many shopkeepers/merchants also used their personal Paytm accounts to accept payments at their shops,” it said, adding that the 0 per cent transfer to bank fee left an opportunity to misuse, and “many users started funding their wallets with their credit cards and transferring it to the bank all for free.”
Furthermore, the company said the 2 per cent fee would be reversed in the form of a discount coupon for same amount which will be issued within 24 hours of adding money.