Soon after Paytm said in a blogpost that it will levy a 2 percent fee on adding money to wallets using credit cards, its biggest rival MobiKwik announced that it will retain its no charge policy to promote cash-less economy and adding money to wallet via credit card is still free.
“No 2% Fee!” it said on social sites, adding that “adding money to your MobiKwik wallet through credit card is free.” Not only this, “add money on MobiKwik and get 2% cashback.” The offer, however, is not valid on Net Banking and Virtual Card payments.
It may be noted that mobile wallet company Paytm had on Wednesday said in a blogpost that in a bid to avoid the misuse of credit cards, they have announced some changes in their terms and conditions. It said that in the month of November they launched a new payment platform for small merchants at 0% fee. Millions of merchants are accepting Paytm at their shops/ establishments. They prefer to take money to their bank accounts and as a promise to democratizing payments, Paytm made transfer to bank fee at 0%. This was extended to all their users as many shopkeepers/ merchants also used their personal Paytm accounts to accept payments at their shops.
This 0% transfer to bank fee left an opportunity to misuse this service meant for customers. “We saw a disturbing trend when many users started funding their Paytm wallet with their credit cards and transferring it to the bank all for free. They were not only getting free loyalty points which effectively is free cash, but also getting access to free credit,” it said.
Some financially-savvy users (surprisingly many of them employees of national financial institutions) exploited this model to rotate money. To avoid this misuse, Paytm is making some changes in their terms.
It said there will be no fee when you shop on Paytm or pay for any utilities using your credit card or any other payment option, but to avoid the misuse of credit cards, they will put 2% fee (inclusive of taxes) only on adding money to wallet using credit cards, while adding money using any other payment option remains free.
However, this 2% fee charges on credit cards would be reversed in the form of a discount coupon for the same amount which will be issued within 24 hours of adding money effectively giving you this fee back. “This hopefully keeps unintended misuse of our platform away and as a consumer you still enjoy our services at no extra cost,” Paytm said.