Paytm introduces 2% charge on adding money through credit cards: Here’s what it means for you

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Paytm has announced that it is going to start charging 2 percent charge for adding money to the mobile wallet through credit cards. Paytm will be giving a discount coupon as a cashback for the amount charged. The discount coupon can be used to make payments from within the Paytm app, but not to add money to the wallet. The measure is an effort to curb users who exploited Paytm to rotate money and dodge credit card fees, by adding money to the wallet and then transferring the amount to banks. Paytm pays credit card companies a hefty amount for transactions that add money to the Paytm wallet.
Vijay Shekhar, the founder of Paytm has been fielding questions on Twitter by people about the introduction of the additional charge, after Paytm made the announcement in a blog post. “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 post said. Paytm has started implementing the charge from 8 March.

Here are answers to some common questions people have:

Q. Are there any fees for adding money to the Paytm wallet by methods other than credit cards?
A. There are no fees for adding money to the Paytm wallet through debit cards, net banking, UPI or IMPS.
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Q. I use credit cards to make payments through the Uber app, will I be charged now?
A. Adding money to the Paytm wallet through credit cards on the Uber app will not have the 2 percent charge. The money in the wallet added through Uber can be used anywhere.
Q. How does the cashback voucher work? 
A. The gift coupon will be delivered through email and an SMS within 24 hours of adding money to the Paytm wallet with a credit card. On making any payment through Paytm, there will be an option to add a part of the payment through the coupon. The entire amount for a single coupon has to be used for a single transaction, and the voucher cannot be split into smaller amounts. Multiple cashback vouchers cannot be clubbed together into one, but multiple vouchers can be used for a single transaction. More than Rs 250 has to be added to the wallet through credit cards for users to be eligible for the cashback voucher offer.
Q. Why do you not simply prevent the money added from credit cards to be transferred to a bank? 
A. While it is possible for Paytm to introduce such a feature, they did not want to colour the money in a wallet, and ensure that all the money in a wallet can be used in any way.
Q. How did you know that the users who abused the system were employees of national financial institutions
A. On noticing the suspicious activity of the money being rotated to make Paytm pay the credit card fees, Paytm blocked the credit cards of some accounts. These users escalated the problem with Paytm directly, and revealed their places of work during the escalation of the matter.
Q. Is there a time limit for when the vouchers can be used?
A. The vouchers can be used till the end of 2017, irrespective of when the transaction is made. Those unable to use the voucher within the stipulated time can write to Paytm to get an extension.
Q. Are the charges applicable if I use Paytm to make credit card transactions without adding the money to the wallet first? 
A. No. Credit card transactions made directly through the app will not be charged. Paying utility bills, recharging prepaid mobile subscriptions or any purchases made directly through Paytm using credit cards, will not attract the two percent charge.
Paytm announced at the same time that two new payment options have now been introduced into Paytm. Users can make financial transactions using UPI and IMPS. These methods of payment can also be used to add money to the Paytm wallet. There are no transaction fees for the newly introduced methods of digital payments. Paytm has also indicated that it will be blocking the accounts that are abusing the service.

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