Amidst various allegations of charging illegitimate transaction fees, Paytm has maintained its stand on not passing on the Merchant Discount Rate (MDR) that banks and various companies charge for an online transaction, to the customer.
However, on Tuesday evening, in response to user’s tweet asking about a convenience charge, Paytm Care said, “This is to bring in your notice that as per our updated policies, we have started charging a convenience fee in order to continue offering a wider range of services on paytm platform.”
In early July, Paytm had released a blog post claiming it does not charge ‘convenience fee’ or ‘transaction fee’ on Patym app on any mode of payment — cards, UPI, netbanking and wallets. “Paytm customers can continue using all [the] services available on our platform without any fee (same as before),” read the statement.
The move was appreciated by most, however the allegations of convenience fees being charged refused to die down. Paytm Care’s tweet was an official announcement about transaction fee policy.
According to the screenshot shared by the user, Paytm charges a convenience fee ranging from INR 20 to INR 190 based on the transactions. The transaction slabs are an amount up to INR 5 K, INR 5 K to 10 K, INR 10 K to 25 K, INR 25 K to 50 K.
Paytm spokesperson clarified, “LIC charges convenience fee towards the credit card MDR charges applicable on all credit card payments on their website and on Paytm app as well. However, we offer flexibility to our users to pay using UPI, debit card, net banking or through their Paytm wallet at no charges.”
Why Is Paytm Convenience Fee An Issue?
Complaints have been filed by consumers and activists overcharging of convenience fees or internet handling fees. Hyderabad Police started scrutinising digital platforms like Paytm, BookMyShow and movie hall chain INOX for charging internet handling fees, which are illegal under the IT Act 2016.
The complainant Vijay Gopal, a Hyderabad-based activist who also runs Forum Against Corruption, says that internet service provider such as Paytm, BookMyShow and others don’t have the permission to charge such fees according to 6A (3) section of the IT Act. Under the Act, a service provider can collect, retain and appropriate service charges after taking permission from the government.
The development was revealed in an RTI filed by Gopal, in which the Reserve Bank of India (RBI) stated that the online movie ticketing platforms do not have the right to charge any such fee. The RBI reply also adds that charging extra was a violation of the RBI’s MDR regulations.