New Delhi, March 9: To combat the misuse of zero fee transfers, digital wallet firm Paytm on Wednesday announced a 2% charge for recharging their wallet using credit cards. It will return the 2% charge in the form of coupons that can be used on its platform.According to Paytm, this was being done to combat misuse of its zero-fee transfers, explaining that savvy users were rotating their cash through the wallet to earn essentially "free" money in the form of reward points. Paytm founder Vijay Shekhar Sharma clarified that the coupons can also be used on third-party sites to pay Swiggy or Uber, although this mechanism has not been activated yet.
Since November Paytm has been allowing users to take cash out of the wallet to their bank accounts at no charge. Paytm and other wallets haven't charged fees for depositing cash into their systems. This meant that credit card users could fill up their Paytm wallets using the card, and then transfer that money back to their bank accounts, at no charge. "They were not only getting free loyalty points which effectively is free cash but also getting access to free credit," Paytm noted. This would be subsidised by Paytm's own costs, as the company pointed out.
Paytm is now charging a 2% deposit fee from credit card users, and refunding them the same in the form of a coupon that can be used on the Paytm app. As we mentioned, on Twitter, Sharma has clarified that the coupons can work on third-party sites as well and added that you will be able to use these with apps such as Swiggy, Uber.
There are a couple of other caveats listed on the FAQ page. For one, these refund coupons will only be given when the amount you're filling up is more than Rs. 250. If your transaction is lower than that, you will not get a coupon. Also, these coupons can only be used in a single transaction. Also, the coupon isn't applied as a discount on the transaction it gives you an instant cashback to your Paytm wallet.
The coupons can also be used for bill payments, recharges, and so on, as these are not limited to shopping on Paytm Mall. The vouchers will expire on December 31, 2017, but can be extended on request.