Paytm removes levy on credit card transactions

TWO DAYS after Paytm said Friday it would charge a 2 per cent fee on credit card transactions to load its wallets, the payments firm has suspended its decision after facing criticism over announcing a blanket levy to avoid alleged misuse of its facility by certain individuals.

Paytm in a statement said: “Keeping the millions of customers and merchants interest as utmost priority, the company has decided to remove the 2 per cent fees and announced that it will use a series of features and constantly target the misuse. The company is also strengthening the team which focuses on identifying and blocking various types of misuse.”

On Wednesday, the firm had said in its blog that it would impose the levy to avoid “misuse” by users that were gaining access to free credit, by transferring money from credit cards to wallets and then to their bank accounts. “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 company had said.

In November, it removed any charges for merchants to transfer money from their wallets to their bank accounts, and this facility was later extended to all users. Paytm alleged that the zero per cent bank transfer 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”.

After announcement, several users took to Twitter to point out their inconveniences on account of the extra 2 per cent levy.