Indian e-commerce payment system Paytm will be charging 1.75% and will also levy goods and services tax (GST) if a customer adds more than ₹10,000 in a month in Paytm wallet using a credit card. Customers can add up to ₹10,000 from their credit card free of cost. The levy of charges will be occurring from 2020.
Paytm on Twitter replied to a query, “Please note that charges of 1.75% + GST shall be applicable for money added through credit card once the limit of 10,000 is reached,”
The major reason why Paytm has authorised such a hike is that they have observed that some users who load their wallets through credit cards and are soon willing to transfer their funds to their respective bank accounts, are most likely to spent or invest that amount. In other words, the wallet user would take advantage of the 40-day interest-free period available on credit cards.
In case the first transaction exceeds the limit of ₹10,000 in a month, then Paytm will charge 1.75% and impose GST. Transactions that follow will be charged as per the company rules. In case there are multiple transactions totaling less than ₹10,000 in a month, then it will be free of any charges.
Other competitors of Paytm like MobiKwik had said that it will continue to offer free loading of funds using credit cards. Sunil Khosla, Head Digital Business, India Transact Services Limited says, “Other wallet companies may introduce loading charges using credit cards after taking into consideration feedback from Paytm customers. They may charge for loading amounts more than Rs 5,000 or Rs 20,000 using a credit card. It will be interesting to watch.”
Rajeev Agrawal, CEO of Innoviti payment solutions says, “Paytm seems to be monetising on the customer base it has built in the last couple of years and seeing whether they are ready to pay for the convenience offered.”
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How do the charges surface in reality?
Case 1: If the 1st transaction of money added in the wallet in a calendar month is INR 12,000/-, a fee is charged on entire the INR 12,000/-.
That is, you will be charged INR 240/- extra. So total deduction shall be of INR 12,240/- and the amount added to your wallet shall be INR 12,000/-.
All subsequent transactions shall be charged accordingly.
Case 2: Multiple transactions of add money with a cumulative amount lower than INR 10,000/-
For example, 1st transaction of INR 1,000/-, 2nd transaction of INR 2,000/-. Neither of the two transactions is charged.
The cumulative money added in the calendar month is INR 3,000. Therefore, any transaction up to INR 7,000/- will not be charged. However, if you initiate a transaction of INR 7,001/- the entire amount of INR 7,001/- shall be charged. All subsequent transactions shall be charged too.
Case 3: Multiple transactions of add money with a cumulative amount lower than INR 10,000/-. For example, 1st transaction of INR 1,000/- 2nd transaction of INR 2,000/- 3rd transaction of INR 3,000/- and 4th transaction of INR 4,000/-. Neither of the four transactions is charged as the cumulative amount added is below INR 10,000/-. All subsequent transactions shall be charged.
