Over the last couple of months, we have noticed a disturbing trend of few Paytm customers using their Paytm Wallets to rotate money from their Credit Cards to their bank accounts. Such acts are done in the hope of earning Credit Card points or gaining access to free credit.
We have blocked some Credit cards for prevention of usage for unintended purposes and have put a transaction engine in place to detect such attempts. This will ensure we identify genuine customers and help us serve them better.
We encourage all our users to use Debit Cards or Net Banking to add money to their Paytm wallets if they are facing issue in using their credit cards.
When a user adds money using credit card, we pay a large fee, nearly 2%, to the credit card company. We don’t currently pass along this fee to the user. Hence, the free credit days, loyalty points, etc. that the issuing bank gives the user is not funded by the bank; it is funded (indirectly) by merchants like us. Since we are not charging users to take money to their bank account, we now choose not to lose money on this behavior.
Vast majority of users can still use their credit cards. We have only blocked a small number of credit cards which have been used predominantly for the purpose of taking this money to a bank account, and in the process “earning” free credit days, loyalty points, etc. Such users are free to use debit cards or netbanking.
Bottom line — if you are someone who uses Paytm mainly to transact on Paytm, you will find zero discomfort.